Disclosure marks first instance of Ma Xiaohong being named in China’s investigation into her trading firm
By CHUN HAN WONG
The Wall Street Journal
Sept. 23, 2016 11:16 a.m. ET
BEIJING—A Chinese businesswoman under U.S. scrutiny for her alleged role in aiding North Korea’s nuclear program is a suspect in a Chinese investigation into her trading business, according to a separate company in which she is a major shareholder.
Friday’s disclosure about Ma Xiaohong is the first to tie her to a criminal investigation. Police in the northeastern Chinese province of Liaoning said earlier this month that they were investigating the trading firm that Ms. Ma founded, Hongxiang Industrial Development Co., for alleged “serious economic crimes,” without naming her.
In a stock-exchange filing, Liaoning Darong Technology Co. said it hasn’t been able to reach Ms. Ma, who chairs its supervisory board, since the company learned of the criminal probe. It didn’t specify when it found out.
Ms. Ma is the second-largest shareholder in Darong, an information-technology firm, with a 17.2% stake, according to other filings issued earlier this month. In Friday’s filing with a Beijing-based exchange for mostly smaller companies, Darong said Ms. Ma’s situation hasn’t yet affected its operations but could cause “negative impact” on the firm.
Attempts to reach Ms. Ma haven’t been successful. Yao Jizhou, a Hongxiang Industrial official and assistant to Ms. Ma, declined to comment.
Calls to police in Liaoning province and in the Chinese border city of Dandong, where Ms. Ma and Hongxiang Industrial are based, weren’t answered.
The U.S. and China have often sparred over how best to rein in North Korea. The investigation into Ms. Ma and her company appears to mark a new effort by U.S. and Chinese authorities to pursue Chinese businesses for their suspected role in supporting North Korea’s nuclear-weapons program. Earlier this month, Pyongyang conducted its fifth atomic test in a decade.
Liaoning police announced its investigation after prosecutors from the U.S. Department of Justice made two trips to Beijing last month to alert Chinese officials about alleged activities by Ms. Ma and Hongxiang Industrial, The Wall Street Journal reported this week.
The Justice Department cited alleged evidence that the businesswoman and her company had aided Pyongyang’s nuclear program and its efforts to evade United Nations and Western sanctions, according to U.S. officials.
It isn’t known if the Liaoning police probe is related to the U.S. allegations.
Ms. Ma, a Communist Party member, founded Hongxiang Industrial in 2000 to trade commercial goods with North Korea. She grew her business into a conglomerate, Liaoning Hongxiang Industrial Group, with some 680 employees covering interests in cross-border trade, hotels and tourism.
In a report released this week, researchers from nonprofit groups in the U.S. and South Korea say Hongxiang Industrial’s trade with North Korea includes goods that have both civilian and military purposes, including applications in nuclear-weapons development.
Chinese authorities in recent weeks have frozen certain assets held by Hongxiang and Ms. Ma, including her and her family’s holdings in Darong, which offers mapping and other geographic data services.
Ms. Ma was Darong’s vice chairman until last December, when she was appointed chair of its board of supervisors, which monitors the performance of company executives and directors. Ms. Ma’s mother-in-law and three siblings each hold roughly 1% of Darong shares.
Darong has commercial dealings and overlapping personnel with Hongxiang Industrial, according to corporate filings. This year, Darong borrowed 9.75 million yuan from Hongxiang Industrial through a zero-interest-rate loan, those filings show.
Darong’s chairman and largest shareholder, Chang Wei, on Wednesday called for Ms. Ma’s removal from the board of supervisors, a proposal that Darong shareholders would vote on at a meeting next month, the company said in a separate filing.
—Junya Qian in Shanghai contributed to this article
Write to Chun Han Wong at email@example.com
Tags: aluminum ingots, aluminum oxide, ballistic missiles, China, Darong, Hongxiang Industrial, Ma, Ma Xiaohong, North Korea, nuclear, nuclear weapons, South Korea, U.S., U.S. Department of Justice, Yao Jizhou