CEFC China Energy 'seized by Shanghai govt'

Move comes as chairman probed over suspected economic crimes

BEIJING • Shanghai Guosheng Group, a portfolio and investment agency controlled by the Shanghai municipal government, has taken over the management and daily operations of CEFC China Energy, the South China Morning Post (SCMP) reported yesterday.

The reported move comes after Mr Ye Jianming, the chairman of CEFC, the private firm that has agreed to buy a nearly US$9.1 billion (S$12 billion) stake in Russian oil major Rosneft, was investigated for suspected economic crimes, according to a source.

The SCMP report cited two unidentified sources with direct knowledge of the matter.

Responding to the report, a CEFC spokesman said that the company has not been informed of any takeover and that CEFC China Energy's management continues to run the company.

CEFC disputed the reports that Mr Ye was being investigated, saying in a statement issued late on Thursday that they "had no basis in fact" and that the company was "operating normally".

Meanwhile, trade in bonds issued by CEFC Shanghai International Group has been suspended indefinitely following a fierce sell-off.

AGAINST FLUCTUATING PRICES

To protect against unusual fluctuations in the price of outstanding bonds, and in accordance with relevant regulations of the Shanghai Stock Exchange, (trading of) these bonds will be suspended from March 1.

CEFC CHINA ENERGY, in a statement on the indefinite suspension of the trade in bonds issued by CEFC Shanghai International Group.

Trade in five bonds issued by the group with a total value of 14 billion yuan (S$2.9 billion) was suspended from Thursday, the company said in a statement.

It did not say when trade might resume.

The price of the company's 3 billion yuan, 4.98 per cent 2020 bond fell 33 per cent on Thursday morning after the media reported that Mr Ye was being investigated, prompting the Shanghai Stock Exchange to suspend trading in CEFC Shanghai International bonds for most of the day.

"To protect against unusual fluctuations in the price of outstanding bonds, and in accordance with relevant regulations of the Shanghai Stock Exchange, (trading of) these bonds will be suspended from March 1," the statement said.

CEFC China Energy appears to be the second in the past week to be seized by the Chinese government, as Beijing aims to curtail big-spending conglomerates in a crackdown on financial risk.

Last Friday, the Chinese government took control of Anbang Insurance Group and said its chairman had been prosecuted for economic crimes.

Other conglomerates with major overseas assets have also come under government scrutiny in recent months, buffeted by shifting policy winds.

These include HNA Group, the parent of Hainan Airlines, Dalian Wanda, Fosun and others that had once enjoyed government support and encouragement to invest abroad.

REUTERS

A version of this article appeared in the print edition of The Straits Times on March 03, 2018, with the headline 'CEFC China Energy 'seized by Shanghai govt''. Print Edition | Subscribe