News Content

Work starts on Nicaragua canal, but leading HK company's record queried

WORK has begun on the projected US$50 billion Nicaragua canal, but soundness of the Hong Kong-based HK Nicaragua Canal Development Investment Co Ltd (HKND Group), and more particularly its Beijing parent, Xinwei, has been questioned.

Yet with Nicaraguan President Daniel Ortega, the former Marxist guerrilla chief, by his side, Xinwei/HKND Group owner and CEO Wang Jing said the tender for the preliminary design of the project would be submitted by the end of the first quarter of 2015.

By the end of the third quarter, excavation work would begin, with a tender for the design of the locks due by the end of the year, he said.

While HKND Group's current whereabouts in Hong Kong was listed as "unavailable" on one business website, they were reportedly lodged on the 18th floor of the IFC2 in Central Hong Kong in June of 2013.

The official groundbreaking ceremony in Nicaragua was symbolic because work had already started on an access road to for machinery to build a port for the canal on the Central American country's Pacific coast.

The Nicaraguan government says the proposed 278-kilometre (172-mile) canal to be open in 2020, is a project of HKND Group, which is controlled by Mr Wang, a little-known Chinese telecom mogul well connected to China's political elite.

Nicaraguan presidential spokesman Paul Oquist has said that feasibility studies had been delayed by changes to the route and would be ready by April. Mr Oquist said the "core financing" would come from public and private Chinese money.

Little is known about Mr Wang, aged 40, of how he got into a position to buy Xinwei his main Beijing based company, reported The Associated Press in an extraordinary thoroughgoing report.

Mr Wang, it said, has been a director of about a dozen other companies, some current, others "dissolved". Even Chinese state-run financial news organisations have noted that they have been unable to uncover much about him prior to 2010.

Yet Xinwei's website, which the Hong Kong Shipping Gazette, found flashy, but uninformative light, shows national leaders including President Xi Jinping and Premier Li Keqiang visiting the company.

Analysts say Xinwei has a US$2 billion line of credit from the state-owned China Development Bank, said The AP.

Xinwei was founded in 1995 under the control of state-owned China Datang Corporation. It developed wireless telecommunications technology that is supposed to function as an alternative to better-known standards that are ubiquitous in much of the world.

In 12 of the 20 countries Xinwei Telecom Enterprise Group and associated companies say they've done business, there was no evidence of a successful, large-scale project up and running, said The AP.

In Cambodia, a promised high-tech new wireless network has yet to launch nationwide after unexplained delays. In Zimbabwe, officials say Xinwei's partner had its licence pulled by regulators and assets seized by a local bank, said the report. In Cameroon, a partner that Xinwei says runs the largest national broadband network is described by the government as smaller than three competitors and under investigation for false performance claims.

And in Nicaragua, where Mr Wang has formed a new company to build a waterway that could be three times the length of the Panama Canal, there is no sign of a promised US$700 million national wireless network more than a year after he announced his intent to build it.

The Nicaraguan government has declined to release any details of its request for proposals for a new wireless voice and broadband system last year, but the initial asking price for the concession was $90 million, according to an official with one of Xinwei's competitors, who spoke on condition of anonymity for fear that it would hurt his relations with the Nicaraguan government.

In Ukraine, Xinwei says it inked a $1 billion deal with a local provider last year to build public and private communications network across the country. Analysts there said there is no sign that any project involving Xinwei is close to becoming reality.

In Russia, Xinwei says it signed a 2011 deal to build $4 billion worth of networks. Xinwei said that it has launched what it called "first-phase investment" in Russia and completed the initial phase of financing in Ukraine.

"This is definitely not a major player in Russia," said Anna Lepeutkhina, a telecoms analyst at Moscow-based investment bank Sberbank CIB. "No one has written or talked about it."