Chinese tycoon who modeled himself on Warren Buffett helping authorities with probe, his firm says

Fosun International Chairman Guo Guangchang in 2014. (Miguel A. Lopes/European Pressphoto Agency)

By Simon Denyer-December 11

BEIJING — One of China’s richest men and best-known entrepreneurs is being questioned by the authorities in an investigation, his company said Friday, after earlier news of his disappearance forced the suspension of trading in its shares and sent shivers through the stock market.

Shanghai Fosun Pharmaceutical, part of the Fosun Group that owns Club Méditerranée as well as the Chase Manhattan building in New York, said in a statement that group Chairman Guo Guangchang was “assisting the relevant judicial organs with an investigation,” without giving details.

“Guo Guangchang can participate in important decision-making in proper ways,” the statement said. “The board of Fosun Group doesn’t think this will have any negative effects on the operation or finance of Fosun Group.”

The statement said share trading would resume Monday.

Earlier, Caixin magazine reported that Fosun had been unable to contact Guo since midday Thursday. The magazine cited social media messages saying he was seen being led away by police at Shanghai airport.

 

Guo’s disappearance came in the midst of a far-reaching crackdown on corruption launched by President Xi Jinping. It has netted many top Chinese executives, mostly from state-owned companies but also from the private sector. Many have been held for questioning for weeks without any public announcements.

Guo, 48, has a net worth of $7.8 billion, according to the Hurun Report, which tracks China’s wealthiest people. The Financial Times dubbed him “China’s Warren Buffett” for modeling himself on the legendary American investor.

The Fosun conglomerate that he heads has interests in the pharmaceutical industry, real estate, banking, asset management, insurance, steel, mining and retailing, and is one of China’s leading foreign investors.

It won a bidding war to close a billion-dollar takeover of French resort operator Club Med earlier this year. It bought the 60-story tower at One Chase Manhattan Plaza for $725 million in 2013 and has stakes in theater company Cirque du Soleil and holiday operator Thomas Cook.

In the United States, it also owns Meadowbrook Insurance Group and has a 20 percent stake in insurer Ironshore.

Trading in Fosun group companies’ shares was suspended in Hong Kong and mainland China on Friday. In New York, Fosun’s overseas depositary receipts fell 6.6 percent overnight in unusually heavy over-the-counter trading, according to Thomson Reuters data.

Shanghai’s main share index fell 0.6 percent to a five-week low Friday.

 

Guo is among the most high-profile Chinese executives to disappear from the radar recently, but certainly not the first.

On Sunday, China’s biggest brokerage firm, CITIC Securities, said it was unable to contact two of its top executives after media reports that they had been called in for questioning by police. That news also unsettled the stock market, but ultimately the widening anti-corruption campaign may also be having an impact on the real economy.

In China, private-sector investment growth has been sluggish this year, while capital outflows have gathered pace. The anti-corruption campaign has already hit demand for luxury goods and, experts say, made government officials reluctant to sign off on investment deals, lest the deals be found afterward to have involved bribery.

While the government insists that the anti-corruption campaign will ultimately make the economy stronger, there is a real risk that business leaders will become increasingly cautious and move more money overseas if they feel at personal risk.

According to Chinese media reports, Guo was accused in August by a court in Shanghai of having “inappropriate connections” with a former senior executive from the state sector, Wang Zongnan, who was sentenced to 18 years in prison for misusing corporate money.

Many top Chinese business executives have close ties to the Communist Party. As the anti-corruption campaign widens, some of those allies within the party may begin to look more like liabilities.

BNP Paribas estimates that the anti-corruption campaign may already have knocked 1 to 1.5 percent off China’s economic growth in each of the past two years, according to news reports.

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Simon Denyer is The Post’s bureau chief in China. He served previously as bureau chief in India and as a Reuters bureau chief in Washington, India and Pakistan.