French investigators specializing in major financial crimes have seized 10 Bordeaux châteaus owned by the Chinese conglomerate Haichang Group on suspicions of money laundering and tax fraud. Haichang is controlled by its founder Qu Naijie. The case is now in the hands of the National Financial Prosecutor’s Office (PNF) in Paris.
Maxime Delhomme, Haichang's lawyer in Paris, told Wine Spectator that they will appeal the decision to freeze the assets. He blames the investigation on the French being rattled by Qu's buying spree, having acquired 27 châteaus worth approximately $64 million in just four years.
"There is a reaction against the 'invaders,'" said Delhomme.
Qu has come to epitomize the torrent of money flowing into Bordeaux from China in the past decade and the shell companies often used to acquire estates. Qu built his fortune in oil trading and transportation, theme parks and real estate. In 2010, he expanded into wine.
Qu first made contact with Bordeaux officials during Vinexpo Hong Kong. He then hired Christian Delpeuch, a retired négociant and former president of a major Bordeaux trade group, to oversee the acquisition of more than two dozen Bordeaux châteaus between 2010 and 2013.
But his spending spree apparently came to a halt a few years later, around the time President Xi Jinping launched a crackdown on corruption and the misuse of public funds, followed by arrests, the confiscation of property and executions.
Four years ago, China's powerful National Audit Office (NAO) published an article in the Chinese media with a report on companies accused of having misused public funds. According to the article, Haichang received millions of dollars worth of public money earmarked for investment in foreign technology and used the money to buy châteaus.
French authorities at Direction Interregionale de la Police Judiciaire (DIPJ) in Bordeaux saw the NAO report in the media and opened a criminal investigation. Their digging lead to offshore companies based in the British Virgin Islands and a $35 million loan from the Chinese bank ICBC in Paris allegedly acquired using forged legal documents.
China's central government subsidizes private sector investment abroad to invest in technology and resources. In his client's defense, Delhomme noted that wine does involve technology, and it needed updating at the châteaus acquired by Haichang.
Investigators say they have discovered a certain number of infractions, including the laundering of proceeds from tax fraud, the use of forgery and more, which allowed the police to seize ten of Haichang's wine estates in recent months. The Central Office for the Repression of Major Financial Crime (OCRGDF) has also joined the case. The authorities say there is no evidence of fraud in the winemaking operations at the châteaus.
The investigation also targets the people in France who facilitated the acquisitions, including two solicitors, two auditors and a CPA who are accused of failing to adequately verify the source of the funds.