Chinese Billionaire’s Money Laundering Conviction Shocks Bordeaux

A Paris tribunal has found Qu Naijie, the 63-year-old founder of Chinese corporation Haichang Group, guilty of money laundering, sentencing him to a three-year suspended prison sentence, a €1 million fine and the confiscation of nine of his Bordeaux châteaus, worth an estimated €35.5 million ($38.4 million).

The case has stunned Bordeaux. Qu was one of several wealthy Chinese figures who arrived in the region a decade ago, buying lesser-known châteaus with plans to invest in and market them to the growing Chinese wine market. Now, both Chinese and French authorities have accused him of running a scam.

Diving into the Wine Business

Qu was well-known in Bordeaux. Working with Christian Delpeuch, former president of the Bordeaux trade group Le Conseil Interprofessionnel du Vin de Bordeaux (CIVB) and ex-CEO of the négociant Ginestet, Qu snapped up 27 Bordeaux wineries in four years starting in 2010, spending $67 million. Delpeuch provided expertise on vineyard management.

None of the châteaus were major names in the U.S. market. Qu bought rundown estates whose owners were eager to sell, wineries that had failed to find consumers in Europe or America but could be rebranded to sell more lucratively in the burgeoning Chinese market. At this time, other superwealthy Chinese figures, including Alibaba Group founder Jack Ma, real estate and investment executive Pan Sutong and film star Zhao Wei, were also investing heavily in Bordeaux vineyards.

Qu, who made his fortune in oil trading before diversifying into chemicals, plastics, diamonds, real estate and theme parks, had a far-reaching vision. He sought to tie his hometown, the industrial port of Dalian, with Bordeaux both commercially and culturally. He began construction on an elaborate château-themed residential community in Dalian with a vineyard and a massive cellar to warehouse and sell Bordeaux wine.

The project was announced in 2011 to much fanfare at the Bordeaux Chamber of Commerce and Industry (CCIB), with négociants and city officials from Bordeaux and Dalian in attendance. Qu, who kept a low profile in public, sat in the audience, leaving the photo ops to officials, politicians and consultants.

He also worked to boost wine tourism in Dalian. After witnessing the success of the Hong Kong Wine and Dine Festival, a version of Bordeaux’s popular wine festival organized in conjunction with the CCIB, CIVB, the Bordeaux Tourism Office and various wine-related promotional associations, he contacted the CCIB and invited them to do the same thing in Dalian.

China’s Politics Change, Bringing Trouble

The organization began to have problems after the first festival, and the partnership faltered. Other signs of trouble ensued. Delpeuch distanced himself legally from Qu’s estates. According to media reports, labor practices at odds with French law emerged. (Delpeuch told Wine Spectator he only consulted on vineyards and was not connected to château purchasing and finance.)

And then the politics in China changed. Xi Jinping became president in 2013 and soon after began a public war on corruption. Arrests, the confiscation of property, disappearances of known figures and executions followed. While the average income of regular Chinese residents had grown during the country’s economic boom, many of those with close ties to the government were accumulating tremendous wealth.

In 2014, China’s powerful National Audit Office (NAO) issued a damning report on companies accused of corruption, saying that Haichang Group and another Dalian-based company diverted 268 million Chinese yuan—more than $30 million at the time—of government funds to purchase Bordeaux vineyards. The funds were officially earmarked for foreign investments in science and technology as part of the Chinese government’s push to acquire key foreign assets such as commodities, manufacturing and infrastructure to bolster the Chinese economy. The classification of technology…

Source : https://www.winespectator.com/articles/chinese-billionaire-convicted-of-laundering-money-in-bordeaux-wineries