Edelman Had Ties to CCTV Anchor Reportedly Under Probe

(Corrects location of Edelman headquarters in second paragraph of story published July 16.)

The public relations company Edelman said it had business ties to a Chinese celebrity television anchor who was reported by Caixin magazine to have been taken away for questioning by prosecutors.

Edelman, based in Chicago and New York, acquired a majority stake in Pegasus, a Chinese PR firm, from its three founders, including Rui Chenggang, in 2007 “to expand our capabilities in China,” the company said today in an e-mailed statement.

Rui, the host of the financial news program “Economic News” on China Central Television, remained an investor in the company until August 2010, according to company filings. Pegasus was engaged in 2009 and 2010 by corporate sponsors involved in underwriting CCTV’s presence at the World Economic Forum in Davos, Edelman said.

Rui, famous for interviewing CEOs and heads of state including Michael Dell, Meg Whitman, and former U.S. President Bill Clinton, and his producer Li Yong were detained for investigation by officials on July 11, financial magazine Caixin reported July 12, citing unnamed people working at the broadcaster. There has been no official comment from the government or state media about Rui, even after he didn’t appear on air to host his show.

“We are taking this matter very seriously and are continuing to gather the facts,” Edelman said in the statement. It didn’t refer to any investigation into Rui.

CCTV didn’t respond to calls and e-mailed requests for comment. Efforts to contact Rui since the Caixin report have been unsuccessful. Li couldn’t be contacted today.

Forbidden City

Rui rose to international prominence in January 2007 after he criticized the presence of a Starbucks Corp. (SBUX) coffee shop in Beijing’s Forbidden City, the centuries-old imperial palace that was once home to Chinese emperors. Starbucks’ presence “undermined the Forbidden City’s solemnity and trampled over Chinese culture,” Rui wrote in his CCTV blog, and a story about the issue appeared on the station’s national news show, the Associated Press reported at the time. Starbucks shut its shop the Forbidden City six months later.

Edelman’s clients in China have included Ebay Inc., the World Gold Council and Starbucks. Edelman represented Starbucks at least as early as February 2006, according to press releases it issued on behalf of the coffee chain. Starbucks now has more than 1,000 stores in 60 cities in China in the 15 years since its first store opened in Beijing’s China World Trade Center, according to its company website.

“Starbucks has worked with Edelman globally for more than 17 years, including Edelman China in 2006 on a project basis,” Christina McPherson, a spokeswoman for Starbucks, said by e-mail. Since the end of 2007, Starbucks partnership with Edelman in China has been based out of their Edelman Shanghai office. “We have not and currently do not have any business dealings with Pegasus,” she said.

Registered Capital

An article by Tencent Holdings Ltd.’s news portal reported July 13 that Rui had started a public relations company that Edelman later bought.

Pegasus was founded in January 2002, according to company filings in Beijing, with Rui holding 150,000 yuan ($24,165) of the 500,000 yuan registered capital.

“In 2007, Edelman acquired a majority stake in Pegasus, a preeminent Chinese PR firm, to expand our capabilities in China,” Edelman said in the statement. At the time of the acquisition Rui was a “minority, non-active shareholder,” Edelman said.

Shareholding Changes

Edelman held 78 percent of the company after the initial transaction, buying shares from founders Rui, Steven Cao and Howard Hong, it said in the statement. Pegasus changed to become a foreign-invested enterprise in August 2007, according to company filings. Cao is chief executive officer of Edelman China, according to his account on Linkedin.

Cao bought Rui’s remaining shares in 2010 in a transaction that “took longer than expected,” according to the statement from Edelman. After the deal, Edelman owned 83.94 percent of Pegasus and Cao owned 16.06 percent, it said. No company documents have been filed since to register any change of shareholdings.

Edelman have continued to work with CCTV since Rui exited Pegasus. At the Dalian Summer Davos event in September they launched an emerging markets trust report with CCTV’s business channel and Tsinghua University, according to a press release from Edelman. Rui, who was working for CCTV’s business channel at the time, was pictured on stage at the event.

To contact Bloomberg News staff for this story: Henry Sanderson in Beijing at hsanderson@bloomberg.net

To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net Neil Western, Nicholas Wadhams

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