An ongoing scandal involving two powerful Chinese companies has already led to several detentions related to corruption charges, and this week it revealed how one of Beijing’s most prime locations was acquired for just RMB860 per square metre ($12.90 per square foot).
The revelations about the below market land deal for the site of the capital’s Pangu Plaza, have come about as Founder Group and Beijing Zenith Holdings struggle for control of the jointly held finance firm Founder Securities. The dispute has already led to charges of corruption and reports of company official disappearing.
At the centre of the struggle, according to a report today on Chinese finance site Caixin, is Zenith founder, Guo Wengui, a property tycoon who built a fortune of RMB15.5 billion ($2.5 bilion) before disappearing.
Zenith Owner Using Anti-Corruption Campaign to Frag His Partners
According to reports on China’s Tencent, Zenith Holdings, which is one of Beijing’s biggest real estate developers became embroiled in a dispute with Founder Group over control of their joint venture Founder Securities. Founder is best known for its technology ventures, but the Peking University-based group has diverse interests in finance, real estate and other areas, including a securities joint venture with Credit Suisse.
After the two sides were unable to resolve their differences through lawsuits and abitration, and as the ongoing conflict revealed more dirty dealings in the cooperative venture, Guo is said to have reported his partners at Founder to China’s anti-corruption authorities.
Following weeks of denials, Founder revealed in January that four of its senior executives — CEO Li You, chairman Wei Xin, executive president Yu Liying and chairman Li Guojun — had “been asked to assist police investigations.” Later that month, Lei Jie, the chairman of Founder Securities and of its joint venture with Credit Suisse Group AG, was said to be missing.
Source variously report that Guo himself has been detained by the authorities, or fled overseas.
After disputes between Guo and Founder over the composition of Founder Securities’ board, Ma offered to mediate in return for more than 100 million yuan (HK$126 million) from each side. Tensions arose after Ma learned that Guo had in 2008 pocketed 300 million yuan that should have been shared with him.
An Entrepreneur with a History of Having People Put Away
The conflict with Founder has sparked closer scrutiny of Zenith, bringing to light a 2002 land deal which secured one of Beijing’s prime sites for the fledgling property developer in the run up to the 2008 Olympics.
According to Caixin, during 2002 two companies belonging to Guo were able to purchase from the local land bureau a 400,000 square metre site just five hundred metres from the future site of the capital’s National Stadium – better known as the Bird’s Nest, for RMB360 million ($58 million).
Guo was later able to develop the site into Pangu Plaza, which directly adjoins Beijing’s Olympic park. The five building complex, which is designed to reflect the Olympic torch, contains a grade A office building, a retail promenade, two residential towers, and a serviced apartment block. The developments Pangu Hotel was host to Microsoft’s Bill Gates when the tech mogul attended the 2008 Olympics.
When a vice mayor attempted to have Guo’s purchase of the future site of his 427,000 ultra-high end hotel and commercial complex overturned, the entrepreneur reportedly used his political connections to have the city official arrested on corruption charges.
Now the property developer appears to be using similar tactics against his partners in Zenith Securities.
Guo Linked to Fallen Spy-Master
Both Founder and Zenith have now been revealed to have connections with former executive deputy minister of the Ministry of State Security, Ma Jian, who was detained in January by China’s top anti-corruption authority.
Ma, who was a deputy of disgraced former security chief Zhou Yongkang with primary responsibility for China’s counterintelligence service, was said by Tencent to have been a key go-between in setting up the joint venture between Founder and Zenith, and had even offered to mediate the dispute.
According to Caixin, it was Ma who assisted Guo in spying on then Beijing vice-mayor Liu Zhihua in 2006, to help the property developer keep his Pangu Plaza site.
At that time, Guo reportedly bribed staff at a Beijing hotel to let him record the city officials meetings with his mistress, tapes of which were later sent to anti-graft officials.