Chinese corruption updates
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One of the world’s biggest booze barons, who steered the growth of Mao Zedong’s favourite firewater to surpass the value of Coca-Cola, has been jailed for life in China.
The downfall of Yuan Renguo, the former chair of Kweichow Moutai, the premium maker of baijiu, is a stark reminder of Xi Jinping’s relentless crackdown on corruption. The sentencing also underscores the risks faced by Chinese business elites as Xi orchestrates an unparalleled overhaul of the country’s business landscape.
Yuan left the company in 2018 after nearly two decades in charge. He was arrested the following year and on Thursday was sentenced by a court in the company’s home province of Guizhou, south-west China, after being charged with bribery.
According to state media, Yuan, 64, abused his position for years, taking bribes worth more than Rmb112m ($17.5m) through illicit distribution deals. The Intermediate People’s Court of Guiyang said the fruits of Yuan’s bribes, including property, would be recovered and turned over to the state.
The sentencing marks the latest twist in a years-long saga that has enmeshed the Hong Kong-listed company with Xi’s sweeping crusade against corruption.
In 2013, Moutai’s prices were slashed and its shares tumbled as the new leader’s anti-graft campaign dented the extravagant spending and gift-giving chronic in Chinese business and politics. In the six years to 2018 the Communist party’s Central Commission for Discipline Inspection investigated 2m “tigers and flies” — high-ranking and low-level officials.
Still, China’s apparently insatiable thirst for the top-shelf liquor with notes of soy sauce, as well as retail investors’ appetite for domestic corporate champions, helped buoy Moutai through times of turbulence.
At its peak in February, the company’s equity had a market value of $506bn, easily eclipsing AB InBev, Diageo and Heineken, combined. Moutai shares rose as much as 5.2 per cent in Hong Kong trading on Friday. While it has lost nearly a third of its value since the high point seven months ago, it remains up nearly 50 per cent from the start of 2019.
Yuan’s sentencing was also a reminder of the ruthlessness of China’s courts — and the party’s guiding hand.
That warning comes as a clutch of China’s richest and prominent business leaders, including Alibaba founder Jack Ma, have fallen under immense pressure over the past year in a broadening crackdown.
In January, Lai Xiaomin, the former head of one of China’s biggest asset management companies, was sentenced to death after being convicted for corruption. The penalty was carried out weeks later.
The judiciary has also become a tool of Beijing’s increasingly coercive foreign policy, including ruthless hostage diplomacy, according to analysts. Last month, Michael Spavor, a Canadian entrepreneur who organised cultural exchanges in North Korea, was jailed for 11 years after being found guilty of charges of illegally providing state secrets.
His countryman Michael Kovrig, a former diplomat accused of espionage, faces a similar fate. The pair’s detention since late 2018 and closed-door trials this year are believed to be direct retaliation for Canada’s detention of Huawei executive Meng Wanzhou, who faces extradition to the US.
Additional by William Langley in Hong Kong