The listed Hong Kong company accused of being a front for an international espionage operation is run by a China state-owned conglomerate, operates through a web of companies based in tax havens, and quietly shut down most of its operations three weeks ago.
Our investigations reveal China Innovation Investment Limited (CIIL), which a Chinese defector claims is a front for a spy network, is controlled by an arm of Beijing-based financial giant China Everbright Group, which is owned by the Chinese Communist Party.
Documents filed with Hong Kong’s corporate regulator also show that on November 8, CIIL quietly mothballed as “dormant” at least four of its five “investment” subsidiaries, despite it having owned most of those entities for almost a decade.
The revelations support claims made to media and Australia’s counter-espionage agency ASIO by Wang Liqiang, who claims to be a Chinese spy who engaged in political interference operations in Hong Kong, Taiwan and Australia.
Mr Wang has said he was part of a spy outfit hidden within CIIL, which he told The Age, The Sydney Morning Herald and 60 Minutes was a front company used by Communist Party officials and Chinese intelligence agencies.
CIIL’s move to shutter most of its operations on November 8 came just days after Mr Wang had given sworn evidence to ASIO in October.
It appears CIIL has not told the Hong Kong stock exchange that it has shut down at least four of its five investment arms, a move which came only four months after CIIL said the company had “full confidence in the future prospects” of those companies.
Under Hong Kong corporations law, the company is required to lodge company filings with the corporate regulator.
Because it is listed it must also inform the stock exchange of any material changes to its business or operations under “continuous disclosure” obligations.
On Sunday, CIIL released a statement to the HK stock exchange saying its executive director Mr Xiang Xin and Ms Kung Ching, who is an “alternate director” to Mr Xiang on CIIL’s board, had been held by authorities at Taiwan’s main airport while trying to leave the country.
Taiwan’s state-owned Central News Agency reported the pair were stopped by Taiwan’s Investigation Bureau on suspicion of violating the country’s National Security Act.
The CIIL statement said Mr Xiang and Ms Kung had been detained in relation to Mr Wang’s allegations but said the pair “knew nothing about the issues exposed in the news reports” and said Mr Wang “was never an employee of the group”.
“The news reports were all fictitious and forced,” the statement said.
Mr Wang has said CIIL was created under the People’s Liberation Army General Staff Department and its role was to “infiltrate into Hong Kong’s financial market” as well as engage in “collecting military intelligence”.
Wang said while at CIIL he was told his most important work was “to buy other countries’ weapons and steal US intelligence from them”.
CIIL’s corporate bio states it is a “Hong Kong-based investment holding company principally engaged in the investment in dual usage of military and civil sectors”.
Analysis of CIIL reveals a highly unusual corporate structure.
Despite being listed on the Hong Kong stock exchange, and its offices being based in Hong Kong’s Sheung Wan, CIIL is actually “incorporated” in the Cayman Islands, a notorious tax-haven.
CIIL’s annual report states the company is “principally engaged in investments” and its objective is to “achieve short and medium-term capital appreciation by investing in listed and unlisted companies mainly in Hong Kong and the People’s Republic of China”.
The company’s declared operations consist of its majority (50%-plus) ownership of five “investee” companies.
Those are Topsun Creation Limited, Aesthetic Vision Limited, Blue Angel (H.K.) Limited, Grand Far Sky Limited and United Crown Future Company Ltd.
The first four companies are all incorporated in Hong Kong and documents filed with the Hong Kong regulator shows each changed status from “active” to “dormant” on November 8, after each filed forms titled “Special Resolution (Dormant Company)”.
Those signed documents are written in Chinese, unlike the vast majority of other documents CIIC has filed with the Hong Kong regulator, which are written in English.
CIIL’s fifth investment company, United Crown Future Company Ltd, is incorporated in the British Virgin Islands, a tax haven.
That means company information such as its ownership and registration status cannot be publicly obtained so it is unclear whether this company has also been made “dormant” in recent weeks by CIIL.
Security experts said Chinese espionage operations were likely to use corporate structures based in tax havens, also known as “secrecy jurisdictions”, because doing so allowed them to cloak from public view key company detail such as ownership structures.
CIIL’s accounts state the British Virgin Islands incorporated United Crown Future Company Ltd “owns 100% interest in a company incorporated in the PRC (Peoples Republic of China)”.
That PRC company “is principally engaged in conducting research and development of energy-saving materials for walls”.
CIIL’s interim report for the six months to June 30 this year, filed with the Hong Kong stock exchange, says the “operating results of the equity investments” remained relatively unchanged.
Photo: Alejandro Luengo, Unsplash
“With the easing of Sino-US trade frictions, the future performance of these entities will improve, and the management of the Company is full of confidence in the future prospects of the equity investment,” it says.
CIIL accounts state that since June 1 2003 its “investment manager” has been China Everbright Securities (HK) Limited.
The “authorised representative” of China Everbright Securities (HK) Limited is Mr Chan Cheong Yee, who is also one of the two executive directors of CIIL.
China Everbright Securities a wholly owned subsidiary of Everbright Securities Company, which was established in 1996 and is the “core financial service platform” of Beijing-based China Everbright Group, according to its website.
China Everbright Group is owned by the Chinese government through the state-owned company Central Huijin Investment Co.
“As a member company of China Everbright Group”, Everbright Securities would continue to “enhance its financial service capacity and actively expand its overseas business and sales networks,” the website says.
“Everbright Securities International strives to further upraise its brand and influence in the global market, and develop into an end-to-end financial services enterprise in China and the world over.” ***Update: About two hours after this article was published, CIIL announced two of its non-executive directors had resigned. The resignations meant the company was now “non-compliant” with the listing rules of the Hong Kong stock exchange. The non-executive directors were Mr Chan Wing Kong Ringo and Mr Lee Wing Hang. The statement said CIIL was “in the process of identifying suitable candidates” to fill the vacancies.
This article first appeared at anthonyklan.com
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