Founder of Chinese energy firm Hanergy Li Hejun reportedly detained by police

[Hamartia Antidote]

Chinese energy tycoon Li Hejun reportedly detained by police

Li has previously been banned from acting as a director in Hong Kong after a 2015 share price crash where his company lost almost half its value in minutes.

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• The businessman, who was once classed as China’s richest man, was taken away last month in the northeastern city of Jinzhou, according to Caixin magazine
• Li has previously been banned from acting as a director in Hong Kong after a 2015 share price crash where his company lost almost half its value in minutes

Hanergy founder Li Hejun. Photo: Imaginechina

Energy tycoon Li Hejun, formerly China’s richest man, has been detained by police, according to media reports.

Li, the founder of the Hanergy group, was taken away by police in Jinzhou, a city in the northeastern province of Liaoning on December 17, the financial magazine Caixin reported on Wednesday, citing multiple unidentified former Hanergy employees.

Caixin’s report said Li had not yet returned as of Tuesday and the reason for his detention was unclear.
Jiemian News, quoting an unnamed source, said Li’s detention may be related to the troubled Bank of Jinzhou, his biggest lender.


The bank said it gave nearly 10 billion yuan (US$1.5 billion) to the energy group when its subsidiary Hanergy Thin Film made an initial public offering on the Hong Kong stock exchange in 2015. It raised HK$6 billion (US$765 million) in the IPO.

Li was ranked by the Hurun Report as China’s wealthiest man in 2015 with US$26 billion to his name thanks to a more-than-sevenfold rise in Hanergy’s share price within 12 months.

But a sudden sell-off in May 2015 saw the group’s value dropping by 47 per cent – losing a total of HK$144.2 billion – in just 20 minutes.
The sell-off happened as Li was speaking at the company’s annual shareholder meeting, vowing to build a business empire bigger than Apple.

Li was later forced to delist the company in 2019 after an investigation by the Hong Kong Securities and Futures Commission.
The SFC also won a court order to ban Li from being a director for eight years for failing to disclose loans between the Hong Kong-listed unit and its parent company, Hanergy Mobile Energy Holding.

The Court of First Instance also ruled that Li breached his duties to Hanergy’s shareholders with a number of deals and loans between the unit and its parent firm, where there was a clear conflict of interest.

Li started in business in 1989 after borrowing 50,000 yuan from a university lecturer, and claimed to have made 80 million yuan within five years.
He moved into the energy sector in 1994, buying a small hydropower station in his native province of Guangdong before investing in dozens of power stations across the country.

He then sold off most of his assets to fund a mega hydropower project in Yunnan, which took him nine years and an investment of over 20 billion yuan. The plant turned out to be a major success, generating over 20 million yuan daily for his company.
In 2011 he moved into the solar power industry. While most people bet on polysilicon, he chose thin-film power generation, which is low in efficiency and higher in cost.
In December 2019, Caixin reported that Hanergy’s chief financial officer Huang Songchun was also taken away by police. Huang, who was released several days later, resigned from the group soon after that.

The same year also saw the Bank of Jinzhou, facing major financial trouble.

The bank was once packaged as a poster child for China’s regional banks with high growth and good profitability, but its well-crafted image was shattered in 2019 after its auditor - Ernst & Young - resigned in July that year, citing loan inconsistencies.

In August 2019, the bank admitted it had lost a staggering 4.5 billion yuan in 2018 and an additional 868 million yuan in the first six months of 2019, when it published its long-overdue annual reports.
The troubled bank later had to be bailed out by the state-owned Industrial and Commercial Bank of China, which provided 3 billion yuan to recapitalise the regional lender.
Multiple phone calls to Jinzhou police and Bank of Jinzhou were not answered.
According to Beijing Youth Daily, over 63 officials in Liaoning’s financial institutions were detained between 2020 and 2022 as part of an investigation into corruption in the province.

In May 2019, China’s financial regulators had to take over Baoshang Bank, a lender based in Inner Mongolia, in the first bank failure in China in more than 20 years.
The problems surrounding Bank of Jinzhou and Baoshang Bank highlighted concerns about China’s regional lenders, particularly those in poor cities and rural areas.
They had enjoyed a boom thanks to a state-led spending spree, but financial analysts fear some may struggle to weather China’s economic slowdown.