Wison shares take a hit over CNPC corruption storm

A corruption investigation into China National Petroleum Corp. (CNPC) has pushed down the share price of Wilson Engineering. Hong Kong-listed Wison Engineering said this week that its chairman and controlling shareholder, Hua Bangsong, is “assisting investigations by related authorities,” which quickly sparked speculation the company is linked to a corruption scandal engulfing CNPC, the China’s largest producer of oil.

Wison, which has worked closely with CNPC on petrochemical and refinery projects, suspended trading of its shares at the beginning of September. On the last day of trading in August, it saw a  huge16.5 percent decline in share price. It is thought this is mainly due to speculation about its relationship with CNPC.

The suspension came as Xinhua said the Communist Party was investigating Jiang Jiemin, head of the state-owned assets regulator and the former boss at CNPC. Just a week before, it was revealed four senior CNPC executives were being investigated and had subsequently resigned.

Hua owns 78.1 percent of Wison, making him its largest shareholder. Media reports have questioned whether he actually owns the shares or holds them for unidentified investors. The company said on September 2 that Hua is the real owner of the shares.

Since it was established in 1997, is has maintained a close partnership with CNPC and has been involved in many CNPC refining projects. CNPC and its subsidiaries were responsible for 63 percent of Wison’s revenue in 2009, 80 percent in 2010 and 58.4 percent in 2011, company documents show. I guess this begs the question whether any company should stake so much on an energy company..

Read more at; http://english.caixin.com/2013-09-03/100577432.html

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