News & Analysis

Arrest of Chinese Businessman Leaves CEE Deals in Limbo

The arrest of Ye Jianming, the chairman and executive director of CEFC China Energy, a Global Fortune 500 energy and finance conglomerate, may have wide repercussions across emerging Europe. Mr Ye was reportedly arrested in March on the direct order of Chinese President Xi Jinping. It came in the wake of a US Justice Department investigation which in November 2017 accused CEFC of offering a 2 US dollar million bribe to the president of Chad in exchange for oil rights. A Reuters report suggests that CEFC had been facing a cash crunch, claiming that the comglomerate was prepared to pay annual rates of as much as 36 per cent for short-term funding.

The Shanghai-based CEFC, established by Mr Ye in 2002 when he was in his mid twenties, has spent billions over the past three years buying energy-related businesses in Romania, the United Arab Emirates, Russia and Chad, as well as a number of companies operating in various fields in the US and the Czech Republic.

CEFC has spent as much as 1.5 billion euros in the Czech Republic on the Lobkowicz brewery, Slavia Prague football club, as well as stakes in real estate, media and finance firms, including a 9.9 per cent of the J&T Finance Group. Czech President Milos Zeman even appointed Mr Ye as an honorary adviser. CEFC’s most recent activity in the Czech Republic came in November 2017, when it lead a consortium bidding to pay 500 million euros for Prague-based broadcaster CME, owned by Time Warner.

In Romania, CEFC was last summer given the all clear by both the country’s competition and security councils to buy a 51 per cent stake in Rompetrol from KazMunayGas. Rompetrol operates more than over 1100 fuel distribution points in Romania, Georgia, Bulgaria and Moldova, as well as Romania’s largest oil refinery.

Since Mr Ye’s arrest, CEFC has dropped its bid to buy a further 50 per cent stake in J&T Finance Group, and state-backed China Everbright Bank has filed multiple lawsuits against CEFC (Shanghai) International Group, a CEFC subsidiary, in a Shanghai court. Mr Ye is also now under investigation in the Czech Republic.

CEFC’s European business now looks set to to reorganised. The company said in a statement that there was a “planned change in the shareholder structure” of CEFC and that Mr Ye would “no longer be active as a shareholder nor in the company’s leadership.” CEFC also said that the firm’s activities in Czech Republic would continue, and a new unnamed Chinese shareholder would join the firm.