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Chinese Corruption Probe Targets Firms That Bought Bordeaux Wineries

Companies accused of spending $43 million in state funds on châteaus; unclear if wineries will be seized

Suzanne Mustacich
Posted: July 1, 2014

A Chinese government crackdown on corruption has accused two companies of misusing $43 million in public funds on a shopping spree that included 14 Bordeaux châteaus. The investigation threatens to bring down leading business figures in the People's Republic and could see the châteaus confiscated. It also raises questions about Chinese investments in Bordeaux's wine industry.

Since coming to power, Chinese President Xi Jinping has waged a public war on corruption. Some of the biggest players in China's economic boom have been state-owned corporations and reports of officials and their relatives using political clout to profit have been persistent.

In a report released early this week, China’s National Audit Office (NAO) accused Haichang Holdings Ltd. and Rave Sun group, both based in the coastal city of Dalian, of misspending $43 million (268 million renminbi) in public funds. According to the report, the cash was allocated by the Dalian government to help the firms invest in foreign high-tech companies.

Haichang is a well-known conglomerate in China with investments in property, oil, tourism and shipping; it's owned by the elusive tycoon Qu Naijie (last year, Forbes estimated his net worth at more than $800 million). Qu arrived in Bordeaux in 2010, acquiring his first estate, Château Chenu Lafitte, then quickly snapping up more than 23 châteaus in three years. Haichang installed Chinese management teams at several châteaus and put some back on the market, offering them to Chinese businesses looking to invest in Bordeaux. The company also owned vineyards near Dalian.

The news that Haichang's dealings are being questioned sent shock waves through Bordeaux, reaching the offices of one of the industry's most respected business figures, Christian Delpeuch. The former president of the Bordeaux trade group CIVB and ex-CEO of the négociant Ginestet, Delpeuch works as a consultant for Haichang.

“I’m scandalized,” Delpeuch told Wine Spectator. But he firmly denied any knowledge of shady dealings. “My consulting firm provides advice on the management of the vineyards, but I have nothing to do with the acquisitions, nor have I ever had information about the source of the money. The acquisitions were handled by real-estate agents and notaries, and the finances are managed by Mr. Qu and the team in China.”

Haichang’s manager in Bordeaux said the company did not agree with what had been announced, but that he was not authorized to speak with the press.

The NAO report also accuses Rave Sun group, which acquired Château Les Brettes in 2011 and owns the négociant Brillar. Employees at Château Les Brettes could not be reached for comment.

NAO auditors did not reveal how they traced the Dalian government money to Bordeaux. It also did not say whether local officials were aware of the deals. Qu has always been accompanied by an entourage of public officials from Dalian on his official visits to Bordeaux’s Chamber of Commerce and Industry (CCIB). For the past couple years, the CCIB has worked with Haichang to run an annual wine festival in Dalian. “We learned about [the NAO report] in the news like everyone else,” said Philippe Garcia, CCIB spokesperson.

It’s too early to say whether the châteaus will be confiscated or the owners punished. The NAO is an extremely powerful agency in Beijing. Its main job is to scrutinize financial dealings and report its findings to the various disciplinary, security and judicial bodies of the central government. In the current report, which encompassed far more than just these two companies or the Bordeaux investments, the NAO listed 300 “major violations of law and discipline” involving about 1,100 officials.

Since taking office in 2013, Pres. Xi has pushed anticorruption investigations and called on officials and executives at state-owned businesses to end lavish spending, warning that popular disillusionment with corruption threatens the Communist Party's hold on power. (Some China analysts question whether the investigations are also being used to settle scores.) The consequences of a conviction can be serious, including a lengthy prison sentence or the death penalty. Bo Xilai, the party chief in Chongqing and former mayor of Dalian, was given a life sentence in September, 2013.

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