Mounting questions about who controls HNA, a top Chinese conglomerate

Questions about the ownership and corporate structure of the HNA Group, one of China’s biggest companies, are mounting, prompting scrutiny by regulators in the US and Europe and leading at least one Wall Street bank to step away from it. The mystery surrounding HNA is illustrated by its relationship with a New York-based company, the Pacific American Corporation. HNA has previously said that PAC, as it is known, is an independent company that buys engines, spare parts and other airline equipment for HNA’s subsidiary, Hainan Airlines. HNA has said that it has no ownership stake in PAC. Previously unreported corporate documents reviewed by The New York Times show a closer relationship. PAC is run by the son and younger brother of HNA’s co-founder and co-chairman Chen Feng, and was once controlled by HNA. The younger brother of HNA’s co-chairman was also instrumental in helping create the initial ownership structure of HNA Group, these records show, through the use of entities set up outside China, in Hong Kong and the Cayman Islands. These offshore companies effectively obscured the control wielded by top executives and their relatives. The lack of such disclosures in HNA’s regulatory filings may have violated China’s securities laws on “connected” transactions, two experts in Chinese law say. The omissions are likely to raise more questions about who ultimately controls HNA.<br/>