Chinese Premier Wen Jiabao’s relatives acquired shares in Ping An Insurance Co. (2318) after an appeal in 1999 by the insurer to authorities averted the company’s breakup, the New York Times reported, citing corporate filings and copies of letters and records.
With Ping An threatened by insolvency after the Asian financial crisis, Chairman Ma Mingzhe sought a waiver from a rule that would force the company to be broken up, and he wrote to then-Vice Premier Wen on Sept. 29, 1999, detailing the insurer’s financial performance, the newspaper said.
After Ping An was granted the waiver, Taihong, a company that would later be controlled by Wen’s relatives, bought shares in Ping An in December 2002 for about a quarter of the price paid by HSBC Holdings Plc (HSBA) two months earlier, the New York Times reported. By 2007, the $65 million investment by Taihong was worth $3.7 billion, and the relatives’ stake of that investment probably peaked at $2.2 billion, according to the newspaper.
The New York Times reported last month that Wen’s relatives had controlled assets worth at least $2.7 billion, including holdings in Ping An, citing a review of corporate and regulatory records.
In an e-mailed statement today that didn’t mention the New York Times by name, Ping An said recent media coverage related to the company contained “serious inaccuracies, facts being distorted and taken out of context as well as flawed logic.”
Ping An has strictly complied with local listing rules and regulations and will take “appropriate legal action commensurate with the damage and adverse impact the media reports have caused to the company,” according to the statement.
China’s Foreign Ministry didn’t immediately reply to a fax seeking comment today. The New York Times said Wen couldn’t be reached for comment and Ma declined to comment.
It’s not known if Wen intervened on behalf of Ping An’s request for the waiver, or if he was aware of the stakes held by his relatives, the newspaper said. The New York Times said it found no indication any law was broken, no evidence Wen held Ping An shares under his name, nor any indication Wen shared inside information with family members.
While Taihong, run by Wen family friend Duan Weihong, was recorded as the Ping An shareholder, the beneficiaries of the purchase lay behind investment vehicles controlled by relatives of Wen, including two brothers-in-law, a sister-in-law, and colleagues and business partners of his wife, Zhang Beili, the newspaper said, citing corporate and regulatory documents.
Duan, in an interview with the newspaper, said she bought the Ping An shares for her personal account and received all the returns. Wen’s relatives appeared on the shareholding records by accident, the newspaper said, citing the interview.
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