Xi Jinping tells Chinese billionaires to play by the rules

Even well-connected high-fliers are liable to investigation by the state

Xi Jinping’s government has fired another warning shot at global dealmakers. AFP/GREG BAKER

President Xi Jinping’s government has fired another warning shot at global dealmakers doing business with Chinese billionaires: Not even the most well-connected tycoons are safe.

Ye Jianming, a globe-trotting Chinese tycoon who runs the conglomerate CEFC China Energy, has been investigated by authorities, according to people with knowledge of the situation. The news, first reported by local media outlet Caixin, comes shortly after Xi’s government seized Anbang Insurance Group Co., a global empire whose once-influential founder, Wu Xiaohui, is detained while facing fraud charges.

The scrutiny Ye is now drawing shows how little protection wealth and international connections provide elites in Xi’s China. While many billionaires continue to thrive – including Alibaba Chairman Jack Ma and Pony Ma, the founder of Tencent Holdings – others have seen a swift downfall as Xi uses his increased powers to crack down on financial risks.

The reported investigation “shows that Chinese politics is not just opaque to outsiders, but to insiders as well,” said Trey McArver, co-founder of Trivium/China, which advises companies that work in the country. “Both Ye and Wu convinced a lot of people within China, including powerful businessmen, regulators, etc… That they were well connected.”

CEFC is operating normally and the media reports about Ye are “unfounded” and “irresponsible”, according to a statement on the company’s website.

Since coming to power, Xi has moved to halt the debt-fuelled expansion of China’s biggest businesses, and pushed an anti-corruption campaign that has already nabbed more than 1.5 million Communist party cadres. Other high-profile figures – including several billionaires – have found themselves in Beijing’s cross hairs, including financier Xiao Jianhua, whose Tomorrow Holding was ordered to divest from many of its financial assets.

Xi is set to strengthen his grip on power when China’s rubber-stamp parliament meets next week to pass laws that would allow him to rule indefinitely and give him greater control over the levers of money and power. Some of China’s biggest tycoons, including Pony Ma and Li Shufu, the billionaire founder of automaker Zhejiang Geely Holding Group, are also lawmakers.

Ye’s obscure energy company vaulted onto the international scene last year after it agreed to buy a 14 percent stake in the Russian oil behemoth Rosneft PJSC for $9 billion, a deal that is yet to close. The Chinese firm also has other holdings around the world.

Czech president Milos Zeman appointed Ye as an adviser on economic policies in 2015, and company press releases list him meeting with everyone from European Commission president Jean-Claude Juncker to the senior officials from Georgia.