Disappearing Beijing Tycoon Accuses Newspaper of Corruption

Real estate tycoon Guo Wengui, who was accused in the press of using his connections with China’s security apparatus to bring down a Vice-Mayor of Beijing and have his rivals arrested, is now being sued for seemingly using his hardball tactics against one of China’s best known journalists.

The lawsuit has apparently been triggered by an eight page statement Guo issued on the website of his company, Beijing Zenith Holdings, firing back against Hu Shuli – the editor of China business newspaper Caixin – with his own charges of corruption, following Caixin’s accounts of his business dealings.

Guo was shown in press reports by Caixin, Caijing and Tencent’s investigative news portal Prism, to have made a career of using graft allegations to further his business objectives. The lawsuit is said to be in response to Guo’s article fabricating accusations of adultery and other misdeeds by Hu in his web posting.

The legal action only serves to deepen the controversy over Guo, who built a RMB15.5 billion ($2.5 billion) fortune through cultivating government connections in Beijing while practicing what appears to be the commercial equivalent of UFC cage match tactics on his business adversaries (and sometimes partners).

While some accounts reported the Guo had already been detained by the authorities in a corruption investigation, in the lengthy article posted on his website, the billionaire property developer said that he was in New York for treatment of a long-term leg injury, and noted that he is “currently under the protection of the law of the United States.”

Caixin Suing Zenith in Hong Kong

In a notice posted on its website, Caixin said that it, “has decided to file lawsuits in Hong Kong against the following entities: Beijing Zenith Holdings Co.; the man who controls the company, Guo Wengui; and media outlets involved in disseminating Guo’s slander, including the Hong Kong Commercial Daily and Apple Daily.”

The newspapers published interviews with Guo, detailing his accusations against Caixin and its editor. The mainland business media outlet also said that it had filed a police report against Guo Wengui.

Reports Uncover Guo Role in Founder Securities Scandal

Guo’s eight pages of accusations against Hu Shuli came after Caixin and the other mainland outlets published investigations into the billionaire’s background in Beijing’s real estate market, and his role in the Founder Securities scandal.

The Caixin story revealed how Guo secured the 400,000 square metre site of his Pangu Plaza in Beijing for just RMB860 per square metre ($12.90 per square foot), and how he had the city’s Vice-Mayor put away on corruption charges when the official attempted to block the deal.

The reports also linked Guo to corruption charges against the leadership of Beijing’s Founder Group that resulted in several of the company’s top officials being detained on graft charges, after Founder became embroiled in a dispute with Zenith over their Zenith Securities joint venture.

Guo Wengui Case Exposes the Not-So-Pretty Side of China Real Estate

While it’s common knowledge in China that real estate development is an industry that allows individuals or companies with strong government relationships and banking connections to make profits unavailable to the average investor, the Guo Wengui story has exposed just how savage the property sector can be.

The Caixin report linked Guo to a former party head from Zhengzhou, in Henan province who later received a suspended death sentence on corruption charges, as well as to four other officials punished for corruption in the city where the Zenith founder started out in business.

By using his relationships with these enterprising officials, as well as an apparent knack for extortion and precipitating sex scandals, Guo was able to become the 73rd richest man in China, according to the 2014 Hurun China Rich List.

Guo is now believed to have fled to the US after former spy chief Ma Jian, who appears to have been the tycoon’s strongest ally, was detained on by China’s top anti-corruption authority in January. The billionaire has denied having any business relationship with the fallen official.