Czech Republic says chairman of China's CEFC being probed, to step down

By Jan Lopatka

PRAGUE (Reuters) - Chinese officials have told a visiting Czech delegation that the chairman of Chinese conglomerate CEFC China Energy, Ye Jianming, is under investigation and is stepping down from his post, the Czech president's office said on Monday.

A Czech subsidiary of CEFC also said there was a "planned change in the shareholder structure" of CEFC and Ye would "no longer be active as a shareholder nor in the company's leadership."

In just a few years, CEFC China Energy grew from a niche fuel trader into an oil and finance conglomerate. It agreed in September to buy a 14 percent stake in Russian oil major Rosneft for $9.1 billion (£6.5 billion).

Reuters, citing a person with direct knowledge of the matter, reported on March 1 that Ye, who founded the company in 2002, has been investigated for suspected economic crimes.

CEFC China Energy said at the time it was "operating normally" and that media reports about Ye "had no basis in fact".

Two close aides of Czech President Milos Zeman travelled to China last week to seek information about Ye, amid concerns about the private company's investments in the country, which include stakes in Czech brewery group Lobkowicz, Prague soccer club Slavia Praha, J&T Finance Group, the national airline, hotels and real estate.

Ye has also held the post of an adviser to Czech President Milos Zeman.

Zeman's office said in a statement that CEFC had told the delegation that Ye was leaving his post and the company's shareholder structure.

Shanghai government and other state officials told the Czech delegation at a separate meeting that Ye "is being investigated for a suspicion of breaking the law," the statement said, giving no further details.

The delegation led by Zeman's chief of staff Vratislav Mynar met Shanghai regional government and other officials as well as CEFC President Chan Chauto, it said.

CEFC's Czech-based unit CEFC Europe said: "CEFC Europe has been informed about the planned change in the shareholder structure in which Mr Ye Jienming will no longer be active as a shareholder nor in the company's leadership."

"We consider as extraordinarily important an official confirmation that the CEFC China group itself as a legal entity is not subject to investigation by Chinese authorities," it said in a statement.

CEFC Europe said the firm's activities in Czech Republic would continue, and a new unnamed Chinese shareholder would join the firm.

"CEFC Europe was informed about the entry of a new shareholder into CEFC Europe and considers this to be a great opportunity and advantage given that it is one of the strongest and most prestigious Chinese firms," it said.

Czech news website www.tyden.cz said without naming its sources the new shareholder would be China's state-owned CITIC group, and that it would take a 49 percent stake in CEFC Europe.

The Chinese government seized control of Anbang Insurance Group Co Ltd in February and said its chairman had been prosecuted, demonstrating Beijing's willingness to curtail big-spending conglomerates as it cracks down on financial risk.

CEFC Europe also said that the group was withdrawing a request to the Czech central bank to approve raising its stake in Prague-based J&T financial group, a bank and investment vehicle, to 50 percent from 9.9 percent. That deal was to be the biggest CEFC acquisition in the country.

A spokeswoman for J&T said the move was a "logical conclusion of the current situation" and there have been no talks so far on a further course of action.

(Reporting by Jan Lopatka, Editing by Michael Kahn and Adrian Croft)