HONG KONG (Reuters) - Wison Engineering Services Co Ltd (2236.HK), a major PetroChina supplier, said Chinese authorities investigating the company had seized records and temporarily frozen some of its bank accounts, adding it was no longer able to contact its chairman.
Shanghai-based Wison had previously said chairman and founder Hua Bangsong had been assisting authorities in an unspecified investigation, which coincides with a probe into oil giant PetroChina (601857.SS)(0857.HK) and its parent, China National Petroleum Corp (CNPC).
In a statement, Wison said Zhao Hongbin, manager of the finance department of the company’s unit, Wison Engineering Limited, was also assisting in the investigation. It said it was not aware of the nature of the probe.
In a separate filing to the Hong Kong stock exchange, Wison said executive director and chief financial officer, Chen Wenfeng, had resigned to pursue other business opportunities.
“I think it’s serious. Frozen bank accounts is never a good thing... Tends to inhibit one’s ability to pay bills etc and causes your subcontractors to worry,” said Simon Powell, head of Asian oil and gas research at CLSA in Hong Kong.
Shares in Wison - which has derived most of its revenue from PetroChina in recent years - have been suspended in Hong Kong since early September, when the company first said Hua was helping authorities with the unspecified investigation.
They had fallen 30 percent after the Chinese government announced the investigation into several former top executives at PetroChina and CNPC in late August. Authorities have not announced any details of that investigation.
“Not surprisingly, the stock remains suspended. The ‘petro purge’ continues,” added Powell.
The investigations follow a pledge by President Xi Jinping to crack down on rampant corruption in China, which he says threatens the ruling Communist Party’s survival.
Wison said last week it would consider appointing an acting chairman in the wake of the turmoil at the company, which offers consulting, engineering and construction services to petrochemical and refining projects.
“As part of their investigations, the regulatory authorities made enquires about certain projects of the group, (have) taken books and records and frozen certain bank accounts of the group,” Wison said in the statement.
“The company was not told the reason for freezing our bank accounts. After the company’s communication with the regulatory authorities, some of the frozen bank accounts have been released,” Wison said.
According to its filings with the Hong Kong stock exchange, Hua, 47, founded the company in 1997 and built it into China’s largest private petrochemical contractor thanks largely to revenue from PetroChina, one of the world’s most valuable energy firms.
Since 2002, Wison has won numerous engineering, procurement and construction contracts for PetroChina’s petrochemical and refining projects in a sector dominated by state-owned contractors.
Between 2009 and 2011 for example, Wison booked 8.1 billion yuan ($1.32 billion) in revenue from PetroChina, according to filings, accounting for the majority of its revenue over that period.
Wison has said it won the contracts because of its technical capabilities, experienced team and track record. Many of its senior staff are Chinese oil industry veterans, some of whom used to work for PetroChina, according to its website.
After nearly a decade of relying of PetroChina for work, Wison appears to have diversified. From 2012, its revenue from PetroChina has been minimal, amounting to just 111.1 million yuan in the first half of this year, or 5.6 percent of the total.
PetroChina’s operations span the globe, from oil production facilities and pipelines to refineries and petrochemical projects. ($1 = 6.1212 Chinese yuan)
Additional reporting by Anne Marie Roantre; Editing by Dean Yates