Behind the Rise of China’s HNA: The Chairman’s Brother

When a former Microsoft executive decided to sell his collection of eight golf properties in Washington state, a small Chinese company started quietly negotiating for them.

The company, West Coast Golf, said it was working on behalf of wealthy Chinese investors, including a Hong Kong company. Then the talks stalled.

A year later, a big Chinese conglomerate, HNA Group, suddenly swooped in and agreed to pay $137 million to buy the properties from the former tech executive’s company, Oki Golf.

The two Chinese companies had an important connection: The head of West Coast Golf, Wang Wei, is the younger brother of HNA’s longtime co-chairman, Wang Jian.

The activities of Wang Wei have been central to HNA’s transformation from a small regional airline to a vast global conglomerate, one with nearly $100 billion in revenue and stakes in Deutsche Bank, Hilton Hotels and Swissport.

For nearly 25 years, Wang Wei has been a little-known force at HNA, working behind the scenes to orchestrate investments, build supply chains and transfer assets, according to a review of annual reports, court filings and corporate documents by The New York Times. In one of the most pivotal moves, Wang Wei helped set the stage for a takeover of HNA by company insiders and their families — a change that transferred control of a state-backed company into private hands.

In recent years, HNA emerged seemingly out of nowhere to become one of the most prolific deal-makers in the world, spending billions of dollars on acquisitions in real estate, finance and logistics. Investors and regulators in the United States, in Europe and elsewhere have been trying to understand the ambitions, operations and finances of the global behemoth — and the players who have helped shape the company, including Wang Wei.

Those questions have taken on more urgency as Chinese authorities press the country’s most aggressive acquisitors to pare back their debt. In a dramatic move, the Chinese government last month seized control of the Anbang Insurance Group, which owns the Waldorf Astoria Hotel in New York and other multibillion-dollar properties around the world.

In the current climate, HNA, which has amassed about $90 billion in debt, is reversing course and selling off assets. Other pending deals by the company remain in limbo.

Understanding HNA is difficult. The conglomerate controls a vast network of public and private companies, subsidiaries and affiliates spread across the world. Scores of them have business ties to the friends and families of the company’s senior executives.

A review by The Times found that few, if any, of those personal ties were disclosed to stock and bond investors of the company’s affiliates. Typically, investors want to understand such dealings, which could create conflicts of interest.

Whether Wang Wei was ever formally employed by HNA or its predecessor, Hainan Airlines, is unclear. A review of hundreds of company filings going back to the mid-1990s turned up only a handful of mentions of him by name, and none indicate that he is the younger brother of a top HNA executive. In some cases — like the early negotiations for the Oki Golf deal — the private investment firms of Wang Wei, or those of other relatives, operated behind the scenes.

“These transactions are carefully reviewed to ensure that they were in all respects beneficial to HNA,” Thomas A. Clare, a lawyer for HNA, said in an email. “Working with a business partner who is known to the company and its leadership allowed the parties to work collaboratively from a position of trust and cooperation and, in so doing, achieved even greater results.”

Calls to Wang’s homes and offices were not returned. For years, Wang was largely unknown as a businessman in China. He granted few media interviews and rarely posed for photographs. Even on Hainan Island, where he worked for more than a decade, he was mainly known for running a company that was trying to produce Cuban-style cigars.

Then roughly a decade ago, Wang appeared as a major investor in one of China’s biggest property companies, Dalian Wanda. Records show that in July 2007, he bought a sizable stake in the family holding company of Wanda’s chairman on the same day that a company controlled by the son of a member of the Communist Party’s ruling Politburo took a stake in one of its subsidiaries. Another one of Wang’s investment firms bought a big stake in the Three Gorges Bank, in the city of Chongqing, in about 2008.

The roots of his wealth, though, are tied to HNA and Hainan Airlines.

After his brother Wang Jian helped found the state-backed Hainan Airlines in the early 1990s, the younger Wang became one of the company’s frequent business partners. He set up joint ventures and other businesses to provide services to the airline, including advertising and leasing. He also helped the carrier move into golf, resorts and property development.

Between 1994 and 2010, Wang Wei set up more than 30 companies that did business with HNA and its affiliates, according to corporate filings. One company, a software services firm called eKing, was acquired by HNA, which later sold a piece to private investors for $500 million.

In some deals, Wang Wei started out managing a project on behalf of HNA before quietly taking ownership through another entity.

It happened with West Coast Golf.

In October 1996, Hainan Airlines invited some of the world’s leading golf course designers, including a team working for the golf legend Jack Nicklaus, to help build an 18-hole golf course on a 350-acre plot of oceanfront property in Haikou, the capital of Hainan. When construction began, the winning design team was introduced to Wang Wei.

“He would attend all the meetings,” said O’Brien McGarey, the president of the Dye Designs Group of Denver, which won the design competition. “I never really understood what his role was, but I knew he was Wang Jian’s younger brother. And it was Hainan Airlines that paid me.”

Later, records show, investment companies affiliated with Wang Wei acquired majority ownership of West Coast Golf, which grew from a single golf course into a large property development with luxury villas. It played out similarly when HNA wanted to build a more upscale development, a five-star hotel and resort surrounded by villas, on Hainan Island.

The architectural design team was hired by Hainan Airlines. But Wang Wei was involved in the planning. Wang eventually gained control of the development through one of his businesses, the Sanya Sunny Bay Development Co., corporate filings said.

Today, the development site is home to one of the island’s most expensive tourist destinations — the Park Hyatt Sanya Sunny Bay Resort and a collection of luxury villas that each sell for more than $7 million. Caleb Wang, chief executive of the HTW Tourism Group, said that in 2005 his company bought a majority stake in the development site from Wang Wei.

“He is still a small shareholder,” said the chief executive of HTW, who is not related to Wang Wei. “I’ve only met him once. He was here for the opening of the Park Hyatt.”

Wang Wei also has ties to one of HNA’s biggest shareholders.

Beginning around 2000, a company managed by Wang built a stake in one of the airline’s largest investors, a company called Hainan Qixing, with other HNA insiders that included his brother. The participation of HNA insiders does not appear to have been disclosed in public filings. Regulators in China and elsewhere often require disclosure of related-party deals involving senior executives or members of their families.

Through Qixing, Wang and company insiders restructured the state-backed airline into a privately held parent company called the HNA Group. A large portion of HNA’s shares were then shifted offshore, to Pan American Aviation, a company registered in the Cayman Islands, according to a review of corporate filings in China and Hong Kong.

In recent months, U.S. regulators conducting a review of HNA acquisition have pressed the conglomerate to explain its corporate ownership structure, according to court papers filed in an American lawsuit. As HNA grew into a global power, Wang Wei went global, too.

Hainan Airlines needed to procure goods like jet fuel, aircrafts and spare parts from foreign companies, including Boeing, General Electric and Mitsubishi of Japan. So it formed a series of companies inside and outside China to help source these goods and ship them into the country, for a fee.

One of the companies set up to work with the airline was the Hainan HNA Import & Export Co., a firm partly controlled by Wang Wei, his brother Wang Jian and a group of their longtime business associates, according to corporate records. The import company, in other words, gave the Wang brothers an interest in the company’s purchase of overseas goods, giving them a stake in a business that apparently was not disclosed to investors in Hainan Airlines, a listed company.

Wang Wei’s ties to HNA and its top executives run deep. In 2007, he bought what is now a $5 million residence near Seattle from a company controlled by HNA’s co-chairman, Chen Feng. Then, Wang’s daughter registered two limited liability companies in the city.

One of those companies helped West Coast Golf initiate talks to acquire the Oki Golf properties.

In the summer of 2014, one of Wang’s associates asked for help locating golf facilities in the United States, according to McGarey, the Denver-based golf course designer who had begun working with Wang Wei in the mid-1990s.

McGarey said that he had negotiated an agreement, which included a “success fee,” and then signed a contract with Wang’s West Coast Golf. The document, he said, was reviewed by HNA lawyers on behalf of West Coast Golf. Soon after, he was put in touch with Wang’s son-in-law in Seattle, Mike Ji. They began scouting in Washington state. When they settled on Oki Golf, McGarey brought in two advisers to help with the assessment of Oki’s courses: Dan Conway and Don Lewison.

Together, they approached Scott Oki, the former Microsoft executive who owned Oki Golf.

“I got a hold of Scott Oki. He lives across the street from me,” Lewison, a Seattle real estate broker, recalled. “We met in my house, over coffee and doughnuts. I told him we had a friend who had Chinese clients, and he told me he might want to sell to them.”

Negotiations got underway quickly — and then stopped.

In October 2016, Oki Golf announced that it had agreed to sell a collection of courses to the HNA Group for $137 million in cash. Oki and HNA declined to comment on the deal.

McGarey said he and the two advisers were cut out of the deal — and the fees promised in the contract with West Coast Golf.

“His son-in-law Mike Ji called me after the deal was announced, and said, ‘HNA was the buyer, and it had nothing to do with Wang Wei.'” McGarey recalled. “I was furious. This deal definitely goes back to Wang Wei.”