All about Li Hejun, the energy tycoon arrested in China
Chinese police have arrested Li Hejun, founder of the troubled energy company Hanergy. All the details
Li Hejun, a Chinese energy entrepreneur and once the country's richest man, has been arrested in China.
WHAT WE KNOW ABOUT THE ARREST
The arrest took place in the city of Jinzhou, in northeastern China, on December 17, but the Chinese newspaper Caixin reported it on Wednesday based on information received from former employees of Hanergy, the energy company founded by Li in 1989.
The reasons for the arrest are not clear, but the Chinese financial portal Jiemian News – reported by the South China Morning Post – writes that it could have something to do with the "troubled" Bank of Jinzhou, its main lender.
THE QUOTE OF HANERGY THIN FILM
In fact, the institute provided nearly 10 billion yuan ($1.5 billion) to Hanergy when its subsidiary, Hanergy Thin Film, which specializes in the production of thin film (a material used in solar cells), submitted a initial public offering on the Hong Kong Stock Exchange in 2015. The IPO raised the company HK$6 billion, approximately US$765 million.
THE COLLAPSE OF HANERGY
In 2015, Li Hejun was named China's richest man by the Hurun Report, which deals with such rankings, with assets of $26 billion. This wealth was due to the incredible increase, more than sevenfold in the space of twelve months, in the price of Hanergy's shares. In May 2015, however, in just twenty minutes there was a 47 percent drop in the value of the stock, which lost a total of 144.2 billion Hong Kong dollars.
The stock sell-off occurred as Li was giving a speech at Hanergy's annual shareholder meeting, in which he said he wanted to build a business empire bigger than Apple's.
THE DELISTING FROM THE HONG KONG STOCK EXCHANGE
In 2019, following an investigation by Hong Kong authorities, Li Hejun was forced to delist Hanergy Thin Film from trading on the stock exchange. He was also banned from holding the position of director of the company for eight years for failing to disclose financial transfers between Hong Kong-listed Hanergy Thin Film and its parent company, Hanergy Mobile Energy Holding.
According to the indictment, Li had also defaulted on his obligations to Hanergy shareholders through a series of transactions and loans between the listed unit and the group, making him guilty of a conflict of interest.
LI HEJUN'S CAREER
Li Hejun's entrepreneurial career began in 1989 thanks to a 50,000 yuan loan received from a university professor: he claimed to have managed to earn 80 million yuan in five years.
His entry into the energy sector occurred in 1994, with the purchase of a small hydroelectric plant in the province of Guangdong, where he was born; subsequently began to invest in dozens of power plants scattered throughout China.
Later, Li decided to sell most of his assets to finance a large hydroelectric power project in Yunnan, which required nine years of work and an investment of more than 20 billion yuan. It proved to be a success, providing Hanergy with a daily income of 20 million yuan.
In 2011 Hanergy entered the solar energy market: instead of focusing on polysilicon, a semiconductor material used in solar cells, it chose the thin film, which has a lower generation efficiency and higher costs.
THE OTHER ARRESTS IN HANERGY
Li Hejun's was not the only arrest of a high-level Hanergy executive. Already in December 2019 Caixin had also written about how the Chinese police had kidnapped the financial director Huang Songchun; he was released after a few days, and resigned from office.
THE TROUBLE OF JINZHOU BANK
2019 was also the year of financial woes for the Bank of Jinzhou, which admitted in August that it had lost 4.5 billion yuan in 2018 and another 868 million in the first half of 2019. The regional bank was later bailed out by the state-owned Industrial and Commercial Bank of China, which provided it with 3 billion yuan for the recapitalization.
Between 2020 and 2022, an anti-corruption investigation in Liaoning province, where the city of Jinzhou is located, led to the arrest of more than sixty officials of local financial institutions.
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This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/li-hejun-arresto-cina-chi-e/ on Thu, 12 Jan 2023 14:03:43 +0000.