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CEFC China Energy

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CEFC China Energy
Company typePrivate
IndustryOil and gas, Financial services
FateBankrupted[1]
HeadquartersShanghai, China
Area served
Worldwide
Key people
RevenueIncrease CN¥263 billion (2015)[3]
Number of employees
30,000 (2015)[3]
Websitehttp://www.cefc.co

CEFC China Energy (Chinese: 中国华信能源) was a Chinese conglomerate. The company was among the 10 largest private companies in China in 2014.[4] In 2017, the company was listed as 222 on the Fortune Global 500.[5] In March 2020, the company—along with its subsidiaries CEFC Shanghai International and CEFC Hainan International—was declared bankrupt.[1] The company used a complex web of affiliated companies to facilitate fake deals, inflate trade figures, and obtain bank loans to fuel its aggressive expansion.[6]

Industries

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In 2014, the company generated revenue mainly from oil and gas (60%) and financial services (25%).[3] It also operated in a wide range of other sectors like transport infrastructure, forestry, asset management, hotel management, warehousing services, real estate development and logistics services.[2] A large portion of CEFC's assets were concentrated in overseas markets.[2]

Controlling shareholder

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The controlling shareholder of CEFC was Shanghai Energy Fund Investment Ltd (SEFI), which was registered under Ye Jianming, the chairman of CEFC.[2] Fortune described Ye as "China’s Newest Oil Baron" in its 40 Under 40 of 2016 while noting his close connections to the Chinese government.[7][8]

In the autumn of 2015, Hunter Biden became acquainted with Ye. Ye and Biden worked together for about 18 months, with Biden providing his legal and financial experience to help CEFC establish joint ventures in the United States, such as Hudson West; Biden received fees in the amount of approximately $5 million for his services to CEFC.[9] Biden also worked with CEFC on foreign deals, e.g. State Energy HK in Hong Kong.[10]

In January 2017, Czech President Miloš Zeman appointed Ye as his economic adviser, however, CEFC's many investments in the Czech Republic in the past years were soon noticed by Czech media and led to speculation about whether CEFC was operated at arm's length by the Chinese government.[7][11][12] Reuters reported that CEFC had a rare contract to store part of China's strategic oil reserve and "hired a number of former top officials from state-owned energy companies according to CEFC officials... It also [had] layers of Communist Party committees across its subsidiaries – more than at many private Chinese companies."[11]

In March 2018, Ye was detained in China for questioning on suspicion of economic crimes.[13][14] Reuters and South China Morning Post reported that Shanghai Guosheng Group [zh], a portfolio and investment entity that is a Shanghai municipal government agency, had taken control of CEFC China Energy.[15][16] On March 2, 2018, CEFC announced that Ye had stepped down as chairman and that state-controlled CITIC Group had acquired 49% of CEFC Shanghai, a subsidiary of CEFC China Energy. (CEFC Shanghai owned CEFC Europe.)[16][17] In April 2018, CEFC laid off 15,000 employees, who had not been paid for two months.[18] Later in March 2018, the U.S. Department of Justice arrested and later convicted high-level CEFC representative Patrick Ho in New York City on charges of bribery; Hunter Biden's law firm was paid $1 million to provide for Ho's legal defense.[9]

History

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On the 16 December 2008, Shanghai CEFC Oil Group Co. Ltd. was established by Ye Ling  [叶铃], Zheng Jianding [郑坚定] and Su Weizhong. (Refer to pages 1-1-43 & 1-1-44 of Shanghai Stock Exchange Filing.)

This was a precursor to CEFC China's official registration in China. In January 2010, Shanghai CEFC Oil Group Co. Ltd. was later rebranded as Shanghai CEFC International Group Co. Ltd. (hereafter referred to as "Shanghai CEFC"). In November 2009, China CEFC formed another subsidiary, Beijing CEFC Oil Group Co. Ltd., which was later renamed Beijing CEFC International Holdings Group Co. Ltd. and eventually Beijing CEFC International Energy Co. Ltd. (hereafter referred to as "Beijing CEFC").[19]

Czech investments

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In May 2015, the company acquired a 5% stake in J&T Finance Group.[20] This increased to 9.9% in September 2015.[21] In 2017, the company applied to acquire 50% control of J&T Finance Group, but the Czech National Bank did not approve the deal due to insufficient disclosure of information on the origin of most of the transaction funding.[22][23]

In September 2015, the company acquired multiple assets in the Czech Republic - a majority stake in brewery Pivovary Lobkowicz Group [cs], a 10% stake in airline Travel Service, 60% in football club SK Slavia Prague and real-estate assets in Prague - the building of the former Živnostenská banka at Na příkopě street and Le Palais Art Hotel Prague.[24][25] CEFC also bought a stake of between 50 and 90% in Czech online travel agency Invia [cs] in March 2016, possibly intending to capitalise on the rapid increase in Chinese tourism to Prague.[26]

In 2015, after CEFC China Energy invested in Czech media company Empresa Media [cs], owner of TV Barrandov and magazine Týden, the tone of Empresa's coverage of China changed: All negative reporting about China was replaced by positive reporting.[27] In 2017, it withdrew its investment from Empresa Media.[28]

Failed Rosneft acquisition

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In September 2017, CEFC announced the purchase of a 14.16% stake in Rosneft, Russia's largest oil producer, for about $9 billion.[29][30] However, CEFC was unable complete the acquisition and paid a deal break fee of about $257 million to the sellers, a consortium of Qatar Investment Authority and Glencore.[31]

2018 default

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In May 2018, CITIC Group announced they would repay 450 million Euros owed by CEFC Europe to finance and banking group J&T within days,[32] but since the debt was not paid a week later, J&T announced it had taken over shareholder rights and installed crisis management at CEFC Europe.[33] Several days later, CEFC Shanghai defaulted on $327 million in bond payments, and offered to make the payments six months after the maturity date.[34]

In October 2020, some retail CEFC bondholders in Hong Kong filed a complaint to the Securities and Futures Commission in Hong Kong against the bond's sole underwriter CITIC CLSA.[35]

References

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  1. ^ a b "Fallen Energy Conglomerate CEFC Declared Bankrupt - Caixin Global". www.caixinglobal.com. 2020-04-25. Retrieved 2020-05-11.
  2. ^ a b c d Staff Reporter (11 July 2014). "Mysterious Shanghai private firms makes Fortune Global 500". WantChinaTimes. Archived from the original on 15 July 2014. Retrieved 7 September 2015.
  3. ^ a b c "Corporate Profile". CEFC China. Archived from the original on 4 March 2016. Retrieved 27 December 2017.
  4. ^ "Top 10 private companies in China". China Daily. 20 August 2014. Retrieved 7 September 2015.
  5. ^ "CEFC China Energy". Fortune. Retrieved 2022-08-01.
  6. ^ "Citic Advances Deal to Buy Czech Assets of CEFC - Caixin Global". www.caixinglobal.com. 2019-04-09. Retrieved 2020-05-11.
  7. ^ a b Brady, Anne-Marie (9 May 2019). "On the Correct Use of Terms for Understanding United Front Work". China Brief. 19 (9). Washington D.C.: Jamestown Foundation. Retrieved 23 January 2024. CEFC China Energy is nominally a private company, albeit one with close government connections... CEFC China Energy has been involved in energy investments with the military's "princeling" elite.
  8. ^ Cendrowski, Scott (28 September 2016). "CEFC and Ye Jianming: The Unusual Journey of China's Newest Oil Baron". Fortune. Retrieved 23 January 2024.
  9. ^ a b Areddy, James T (22 August 2023). "Hunter Biden's Foreign Dealings Spell More Trouble Ahead". Wall Street Journal. Dow Jones. Retrieved 24 January 2024. Within 18 months, CEFC-linked entities had paid around $5 million to Hunter Biden... CEFC's demise followed a Justice Department prosecution of a top CEFC representative for bribery in New York, in which the representative [Patrick Ho] was later convicted. Hunter Biden's now-defunct agreement with the government says that in March 2018, his law firm received $1 million for legal fees to assist the CEFC representative.
  10. ^ Kim, Chloe; Matza, Max (8 December 2023). "Hunter Biden's tax indictment: Drugs, escorts and girlfriends". BBC News. Retrieved 24 January 2024. Chinese energy: For two years, beginning in late autumn of 2015, Hunter Biden was in a business relationship with CEFC China Energy, a Chinese energy conglomerate. In 2017, he was promised $1m stemming from a deal with a CEFC associate, State Energy HK, a Hong Kong business.
  11. ^ a b Chen, Aizhu; Lopatka, Jan (13 January 2017). "China's CEFC has big ambitions, but little known about ownership, funding". Reuters. Prague. Retrieved 23 January 2024.
  12. ^ "Who's that 39-year-old paying HK$1.4 billion for three office floors?". South China Morning Post. 21 February 2017. Retrieved 23 January 2024.
  13. ^ "China detains oil entrepreneur, wiping US$153 million off stocks". March 2018.
  14. ^ "China's CEFC chairman investigated for suspected economic crimes". Reuters. March 2018.
  15. ^ "China takes over nation's biggest private oil group in debt crackdown". 2018-03-02.
  16. ^ a b "China's CEFC taken over by Shanghai government agency: SCMP report". Reuters. 2018-03-02. Archived from the original on March 2, 2018.
  17. ^ "CEFC China's chairman to step down; CITIC in talks to buy stake in unit". Reuters. 2018-03-20.
  18. ^ "Down and out: CEFC staff go unpaid as once-high flying company flounders". Reuters. 2018-05-04.
  19. ^ Chubb, Andrew (March 29, 2018). "Caixin's investigation of CEFC and Chairman Ye Jianming". Shanghai Stock Exchange disclosures reveal that CEFC Shanghai was the company name established by Su Weizhong, Zheng Jianding, and Ye Ling on December 16, 2008. The original name was Shanghai Huanli Chemical Sci-tech Co. Ltd.
  20. ^ "China's CEFC takes stake in Czech-Slovak J&T Finance Group". Reuters. 14 May 2015. Archived from the original on 19 September 2015. Retrieved 7 September 2015.
  21. ^ Čínský konglomerát CEFC už má v J&T desetinu. Usiluje o 30 procent http://ekonomika.idnes.cz/cinska-cefc-zvysila-podil-v-j-t-na-deset-procent-chce-30-procent-pu0-/ekonomika.aspx?c=A150903_135502_ekonomika_rts, Retrieved 25 March 2016
  22. ^ Muller, Robert (2018-01-04). "China's CEFC hits regulatory hurdle in pursuit of Czech JTFG stake". Reuters. Retrieved 2018-03-09.
  23. ^ Johnstone, Chris. "CEFC faces obstacle to Czech purchase of J&T Financial Group stake | Radio Prague". Retrieved 2018-03-09.
  24. ^ Hovet, Jason (2015-09-05). "China's CEFC adds to Czech buying spree with airline, brewery deals". Reuters. Archived from the original on 2015-09-08. Retrieved 7 September 2015.Johnston, Raymond (4 September 2015). "Chinese firm CEFC buys majority stake in Slavia Praha". Prague Post. Retrieved 7 September 2015.
  25. ^ Annual report of CEFC Investment (Europe) Company a.s. for calendar year 2015
  26. ^ Čínská CEFC kupuje podíl v Invii, chce nabídnout servis čínským turistům, iDnes.cz, http://ekonomika.idnes.cz/cinska-skupina-cefc-ovladne-on-line-obchodnika-se-zajezdy-invii-pvn-/ekonomika.aspx?c=A160322_173841_ekonomika_rts, Retrieved 25 March 2016
  27. ^ Karásková, Ivana. "How China Influences Media in Central and Eastern Europe". thediplomat.com. The Diplomat. Retrieved 21 November 2019.
  28. ^ "Čínská CEFC vzala zpět svou investici do vydavatelství podnikatele Soukupa | Aktuálně.cz". 7 September 2017.
  29. ^ "Why an Enigmatic Chinese Company Just Spent $9 Billion on a Stake in Rosneft. Bloomberg. 2 October 2017."
  30. ^ "China Deepens Oil Ties With Russia in $9 Billion Rosneft Deal". Bloomberg.com. 2017-09-08. Retrieved 2018-03-09.
  31. ^ "Failed Rosneft Deal Costs CEFC China a Quarter-Billion". Caixin.
  32. ^ "UPDATE 1-China's CITIC to pay CEFC Europe's 450 MLN euro debt - CEFC official". Reuters. 2018-05-09.
  33. ^ "UPDATE 2-J&T Private Investments says takes over shareholder rights in CEFC Europe". Reuters. 2018-05-17. Archived from the original on May 17, 2018.
  34. ^ "UPDATE 1-CEFC Shanghai International defaults on $327 MLN in bond payments". Reuters. 2018-05-21.
  35. ^ "UPDATE 1- CEFC Energy Retail Bondholders File SFC Complaint against Bond Bookrunner CLSA". Debtwire. 2020-12-30.
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