When it emerged a few weeks back that Dalian Wanda was considering to buy Dick Clark Productions for $1 billion, it seemed like an odd arrangement. One is a Chinese mall developer founded by a former Army officer while the other produces live events for television after rising to prominence under a radio disc jockey turned dance show host.
However, the success of China’s richest man and America’s oldest teenager might have been built in some part by the same unscrupulous method, bribery, or as it was known in Clark’s heyday — payola.
Paying to Convert Public Assets into Private Gain
Wang Jianlin’s Dalian Wanda Commercial Properties announced last week that it had fired Leng Chuanjin, the former general manager of Wanda’s operation in its home city of Dalian, in Liaoning province for allegedly bribing local officials to provide special treatment for Wanda, according to an account in the South China Morning Post.
The dismissal came after Leng and another Wanda employee (who has since retired) allegedly paid RMB 300,000 (now $45,000) to Jin Cheng, then the party boss of Dalian’s Xigang district in return for assisting Wanda in business operations and corporate restructuring efforts. That restructuring included the district selling its stake in Wanda to a group controlled by Wang, freeing the property developer to become a private, joint-stock operation.
The alleged bribe was brought to light during Jin’s trial in which the former party boss was found guilty of taking more than RMB 17 million in bribes and sentenced to 13 years in jail.
Jin presided over the decision to sell the district’s stake in Wanda in 2007, and Leng reportedly transferred the bribes to him in 2008 and 2009.
Jin took the money in two batches – 100,000 yuan in 2008 and the rest a year later. Originally founded as a state-owned residential developer in 1988, by 2007 Wanda had already opened its department store chain after branching out into the retail mall business in 2000. By 2006 the company had malls operating in several mainland cities, and by the end of 2015 the developer had opened 133 Wanda Plaza malls across China, and had compiled assets of RMB 90.3 billion and annual revenue of RMB 51.2 billion, according to its website.
Wanda, which has made Wang into China’s richest man, has stated that it was unaware of the dodgy deal with local officials until it was uncovered in the press, and said that Leng was dismissed from the company for his actions, and that his stake in the developer had been frozen, with the accused now-former employee also not to receive dividends from his shareholding.
In hearing the case against Jin, the Benxi Intermediate People’s Court in Dalian did not accuse Wanda or Wang — who is known for running his company with military precision — of any wrongdoing in the case, according to documents obtained by the SCMP.
Keeping the Chinese Government Close
Wang has stated Wanda’s company policy is: “Stay close to the government and distant from politics.” And while none of China’s most notable politicians have a stake in the conglomerate, the New York Times reported several of their relatives and business associates do own Wanda shares.
Earlier this year the newspaper revealed President Xi Jinping’s sister, Qi Qiaoqiao, and her husband Deng Jiagui had been among Wanda’s early investors via Qinchuan Dadi Investment. Ownership of the firm was transferred to business associate Xu Zaisheng in October of 2013.
The niece of Wang Zhaoguo, vice-chairman of the National People’s Congress from 2003 to 2013, has $648 million worth of shares in Dalian Wanda Commercial Properties while former Prime Minister Wen Jiabao’s son and daughter also have connections to Wanda.
There is no evidence any of the politicians whose relatives and business associates own shares benefited in any way, nor did they assist Wanda with any government dealings. Wang has also remained steadfast in his stance that his firm did not need bribes to be successful.
It’s a fact that China’s economy is government-led, and the real estate industry depends on approvals, so if you say you can ignore the government in this business, I’d say that’s impossible,” the retail tycoon claimed in a state television interview earlier in 2016. “I’d say it’s hypocritical and fake to say that. … But at the same time, for example, we don’t pay bribes.”
Joe Shanghai says
Wang and ANYone of consequence pays bribes here in China. ABSOLUTELY NO exceptions. I’m sure they used several intermediaries/bagmen, but they paid, NO question about it. It’s not just the Chinese system, it is their culture – it will never change.