Chinese billionaire plans to buy Eesti Gaas

Photo: toniskoiv.ee

Businessman Henry Fok played key role in rejoining Hong Kong to China. His son Thomas intends to take over Estonian gas market and set up production of LNG for exports.

In mid-April, this year, Thomas Fok proposed Fortum that it sell him its 51 percent of Eesti Gaas shares. For the deal, the Chinese businessman offered the Finns €20m. According to a source of Postimees, this was almost double the amount offered by minority shareholders of the gas company. According to the source, Fortum did reply the Chinese businessman and say they would consider the proposal.

Due to the opening of the gas market, Eesti Gaas majority holders Fortum (51 percent) and also Gazprom (37 percent) plan to sell their shares in the gas monopoly.

Via his representative Martin Napa, Mr Fok sent Postimees his greetings and confirmed his intentions, but proposed to talk about his business plans in Estonia in a few weeks as he arrives in Tallinn. «We wish to give clear answers to all questions, but Mr Fok will be pleased to do that at the end of May,» said Mr Napa.

The Chinese billionaire’s team also includes Tõnis Kõiv, member of environment and EU committees in former membership of Riigikogu, now actively helping the influential Asian investor.

«I met Mr Fok as Chinese business delegation visited Riigikogu in March, last year,» said Mr Kõiv. «As member of parliament, I tried to take every opportunity to introduce Estonia to foreign investors from various nations. Having left the Riigikogu, I am able to help Mr Fok realise his business plans in a more definite manner.»

Commenting a perspective deal with Mr Fok, Fortum was few of words citing the fact that sales of Eesti Gaas shares has not officially been announced.

Therefore, the listed company is not answering questions about when the sales of Eesti Gaas shares will be announced and what the expected deal will be worth. Neither does the company desire to answer regarding competing proposals to Fortum regarding acquiring Eesti Gaas shares by minority holders and by Thomas Fok.

«Regrettably, we are not able, at the moment, to comment on any of that. When we have something to tell the public, we will surely do that,» said Margo Külaots, Fortum’s representative in Eesti Gaas.

Eesti Gaas chairman Aarne Saar, as also representing the company’s minority shareholders, confirmed that he was aware of the influential Chinese’s intentions.

«At the moment, many Chinese are going around the world having lots of money somehow and seeking where to invest,» said Mr Saar. «As Fortum is a listed company, it is not only the money that matters to them, but they also focus on transparency of a party and the origin of the money.»

The company slipping under the Chinese entrepreneur’s influence is not in the interests of Mr Saar and his business partners, as they desire to assume leadership role in Estonian gas biz. «Though Eesti Gaas majority shareholders Fortum and Gazprom have not yet announced selling their holdings, we as minority holders are interested and ready to preparing for a deal,» assured Mr Saar.

In the vision of minority shareholders, Eesti Gaas would become a company with a more varied product portfolio, while considering good relations with the main gas supplier Gazprom the main guarantee for success.

«Eesti Gaas’ contracts to purchase gas from Gazprom expire on January 1^st 2016, and from then on all will depend on who gets the gas, from where and for what price,» explained Mr Saar.

According to Mr Kõiv, Mr Fok’s longer-term strategic interest would be building a LNG plant in Estonia, to launch LNG exports into China.

However, it has surfaced that just recently Mr Fok was partnering with the well-known Estonian technology and transit businessman Endel Siff in the latter’s company Silgas supposed to build an LNG plant at Sillamäe. Mr Siff, at the moment busy putting Silgas through bankruptcy proceedings, had only bitter words to say about the former partner.

«Mr Fok owned a quarter of Silgas, and I covered the costs of building and developing the company. When need arose for expanding share capital or lending money to the company, Mr Fok disappeared and I was not able to convene the company’s general meeting,» said Mr Siff.

«As my company Primos is the only creditor of Silgas, I decided to proceed through the bankruptcy of Silgas.»

At the end of 2014, Mr Siff proposed to Mr Fok that the latter buy out Primos’ holding from Silgas; the man did offer a good price but still remained unreachable for the deal in the end. «I’m not losing anything financially as I consider the Sillamäe LNG project with future – one I will surely continue. But I’m sorry I wasted my time on dealing with Mr Fok,» added Mr Siff.

Marti Hääl, board member of Alexela which is building a LNG import terminal in Paldiski, said it was unlikely an LNG plant would be built in Estonia. «The low point in Estonia-Russia relations will not allow building a large LNG exporting plant in Estonia, needing large-scale supplies of natural gas,» explained Mr Hääl.

«Also, a plant built in Estonia would have no advantage whatsoever before the terminal built in Ust-Luga port, Russia for instance. To import increased volumes of natural gas into Estonia, Kohtla-Järve – Kingissepp gas pipe should be renovated, but with Ust-Luga there’s no need for such expenses.»

As to illustrate the broad sway of Mr Fok, the man has expressed interest towards building a telephone-making factory in Otepää. «At the end of last year, we were talking with representatives of Mr Fok regarding a telephone plant. It was the initial expression of interest kind of talk,» said Otepää Parish elder Kalev Laul.

«We were sent materials introducing Mr Fok’s businesses, and that is all.» Sources say Mr Fok has also expressed interest towards Estonian oil shale industry and he has said he wants to purchase a large amount of shale oil from Eesti Energia plant.

«As answering this question would mean publishing confidential information, I cannot help you,» Eesti Energia press rep Kaarel Kuusk answered inquiry by Postimees.

Thomas Fok – a man near Chinese power

This Monday in Minsk, perspective major Eesti Gaas shareholder Thomas Fok, as part of business delegation, stood with Chinese president Xi Jinping and Belarusian president Alexander Lukashenka. That, at least, is what former Riigikogu member Tõnis Kõiv says.

Having risen to top influence in Hong Kong after WW2, the Fok family grew close to Chinese power elite is due to Henry Fok (1923–2006), who made the clan mighty while actively supporting reunification of China.

Involved in restaurant, real estate, fuel and gambling business, Henry Fok struck it rich in the beginning of 1950ies during the Korean war when supplying China – under trade embargo initiated by Americans – as reported by Los Angeles Times in 1992.

Mr Fok has denied that he made his fortune by arms deals. He has not denied, however, his smuggling of steel, rubber and other materials needed.

Afterwards, Mr Fok built hotels in China, investing millions of dollars and earning Chinese authorities’ favour as a «patriotic capitalist».

Thomas Fok rose to media limelight as handcuffed by US customs agents on October 1^st 1991 in John F. Kennedy Airport. The man was charged with smuggling 15,000 Kalashnikov automatic rifles into the land. Secret agents of American special services ordered the load from Mr Fok to allegedly sell it on to Croatia, wrote Los Angeles Times.

Mr Fok presented himself as representative of organisations linked to Chinese defence ministry. The incident gave US media cause to write about Hong Kong, in its final years as a British colony, as the main centre for international arms smuggling.

According to Chinese media, the arrest of Mr Fok triggered divorce by his wife Emma Hung Kwok-wah. «This was a major shock: he told me he was in the UK, and then I found out in the newspapers that he was jailed in the USA,» Emma told South China Morning Post.

As assured by Thomas Fok’s Estonian business partners Endel Siff and Martin Napa, the man came clean as indeed the Chinese state agencies were behind the deal and provided legal backing.

Halls Industries Ltd, established by Thomas Fok, is a holding company of enterprises engaged in energy, investments, fund management and sports clubs management, as well as charity directed towards research, education, and healthcare.