Shares of several listed firms including entertainment website LeTV have tanked after Ling Jihua, a one-time principal aide of former Chinese president Hu Jintao, was reported to be under investigation for graft, the Hong Kong Economic Journal reported Wednesday.
Ling Wancheng, younger brother of Ling Jihua, had built a sprawling business empire leveraging on his brother’s political clout.
He established Beijing Huijin Lifang Investment Management Company in 2008, and bought into seven companies which have all successfully listed between 2009 and 2014.
But news about his brother’s downfall wreaked havoc on the shares of the listed firms.
LeTV, or Leshi Internet Information & Technology Co (300104.CN), dropped 2.95 percent on Tuesday. Beijing Ultrapower Software Co. (3000002.CN) was down 7.38 percent, while Risen Energy Co. (300118.CN) dropped by the daily limit.
Shanghai Tofflon Science & Technology Co. (300171.CN) declined 2.58 percent, and Hainan Ruize New Building Material Co. (002596.CN) eased 2.53 percent.
Elefirst Science & Technology Co (300356.CN) lost 2.78 percent, while Beijing Tensyn Digital Marketing Technology JSC (300392.CN) closed 3.61 percent lower.
Ling Wancheng, born in 1960, was a former journalist with Xinhua. He was promoted to the deputy secretary of Xinhua’s Youth League and the deputy chief of staff at the state news agency.
He entered the world of business around 1998, serving as general manager of an advertising unit of Xinhua. In 2001, he adopted the name Wang Cheng, and built a powerful business conglomerate covering public relations, advertising, private equity, and internet security.
Several family members have been involved in operating the business group, including Ling Jihua’s wife Gu Liping, his sister-in-law Sun Shumin and nephew Linghu Jian, according to media reports.
The group’s flagship, Trends Communication, has secured huge contracts from government agencies such as Ministry of Railway, China Meteorological Administration, Beijing Tourism Administration and Shanxi Tourism Administration, and a number of state-owned enterprises like China Mobile.
In November 2009, Trends has been rebranded and close relatives of Wang Cheng disappeared as shareholders. Instead, known cronies emerged as major shareholders and members of the management team.
Ling Jihua served for many years in the Central Committee of the Communist Youth League, where his sister-in-law Sun Shumin bought a 30 percent in a business unit for 1 yuan in 2008. The unit serves as an oversight of state-owned assets worth more than 600 million yuan (US$96.3 million).
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