The only Chinese aircraft carrier previously called Varyag and now Liaoning was purchased for China through a middleman, a former officer of the People’s Liberation Army of China, the Army basketball star and a successful businessman, Xu Zengping.
Xu shared details of twists and turns of his adventurous story with the Hong Kong newspaper South China Morning Post that published a series of reports on Varyag vessel changing owners, the Ukrinform correspondent in China has reported.
“I was selected for this transaction. I knew it was a mission impossible, because buying something like an aircraft carrier would be the obligation of the state, not a company, not a person. However, my passion led me to work on this task, because it was the only chance in the history China to buy a new aircraft carrier from a nearly insolvent Ukrainian state shipbuilder,” Xu said.
Xu Tszenpin received instructions from his government and began working on purchasing Varyag in June 1996. He registered a company in Kyiv and hired 12 marine engineers. He held four rounds of talks with the representatives of Ukraine during the period starting January 1998 to the beginning of 1999. “I set foot on the deck of an aircraft carrier for the first time in my life, and I was stunned at the carrier dimensions. I said to myself that I had to buy it at any price, and make all efforts so that it became a part of our fleet,” Xu says about his visit to the shipyard in Mykolaiv on January 28, 1998.
After the Ukrainian government set a condition that after the sale of an aircraft carrier it shouldn’t be used for military purposes, Xu assured the Ukrainian sellers that he intended to convert the ship into the greatest floating casino with a hotel in the world in Macau. The businessman established a fictitious company Agencia Turistica e Diversoes Chong Lot in Macao for these purposes in August of 1997 (at that time Macao was still a Portuguese colony that was only preparing to return to the jurisdiction of China in late 1999 – ed). He spent his own 6 million Hong Kong dollars to make the necessary documents, including a project plan to build a gaming zone aboard the carrier approved by the Government of Macao.
In January 1998, Xu took $2 million in cash and documents and traveled to Ukraine in order to purchase the aircraft carrier. The process was not for the faint-hearted. Xu complains now that in addition to packages of dollars he handed to the shipyard’s officials, he still had to regularly drink 62-degree Chinese ergotou vodka with them. The prudent Chinese businessman brought vodka with him. According to Xu, he was “all soaked in vodka while he negotiated with the leadership of the shipbuilding company and at each meal with them he was forced to drink from two to three liters of ergotou vodka.” However, he argues that during all 4 days of negotiations he always had a sober mind and remembered his mission’s goal.
The sudden change of intentions by Kyiv officials almost foiled the Chinese plans. According to Xu, two months after the parties reached an agreement, the Government of Ukraine suddenly told him that other buyers were interested in buying Varyag, because the sale must be made through a public auction that was to be held in 3 days. The auction was held on March 19, 1998 where Xu represented the only company which submitted a full set of documents in contrast to the companies from the US, Australia, South Korea and Japan. As a result, he purchased Varyag for $20 million (the price was paid in full only a year later).
The night after the purchase, an unidentified helicopter had landed on the deck of the sold aircraft carrier which prompted Xu to collect all ship’s documentation (40 tonnes) and ship it to China the following day. There were still the challenging twists and turns down the vessel’s way through the Bosporus but that’s another story.
Xu Tszenpin doesn’t have any pangs of conscience after he cheated Kyiv. He stated he didn’t violate the terms of the agreement, according to which the vessel was to become a floating casino. “I don’t consider that fact to be a breach of contract. I couldn’t remake it myself, I had no opportunities. The contract doesn’t state that I couldn`t transfer (the vessel). Subsequently, Chinese Navy refitted the military vessel, so I had nothing to do with it whatsoever, ” the businessman said.
The noteworthy part of his “confession” is the one in which Xu in fact declares himself to be the true owner of the aircraft carrier. However, doesn’t claim his rights on the vessel. According to him, the ship belongs to him since the day of the transfer of the ship to the Chinese Navy but he “still never received a penny from the Chinese state.” Money he had used for the preparation of the deal totaling $230 million Hong Kong dollars was loaned to him by his Hong Kong businessman friend in 1997.
Xu is famous as the owner of a mansion in the style of Versailles at the peak in Hong Kong (the peak of Victoria – one of the most famous places on the Hong Kong Island, overlooking the Victoria Harbor and the central regions of the metropolitan area, as well as the Kowloon Peninsula – ed).
China had dreamed about possessing an aircraft carrier in its fleet since the days of Mao in 1970, when the country was trying to arm itself for a possible conflict with the Soviet Union or the United States. When Ukraine declared its intention to sell the unfinished aircraft carrier in 1992, Beijing decided to use this opportunity. The former head of the Chinese Navy, Major-General Zheng Min later told in a TV program on Chinese TV that they saw in Ukraine in 1992, “a brand new ship with totally new equipment inside,” and they advised the central government to acquire the vessel . However, at the moment the official Beijing due to the political situation (the recent collapse of the USSR and the events on Tiananmen square, desire to establish relations with the United States) decided to refrain from buying the vessel.
And then came a 45-year-old Xu, a former military man and a successful businessman with extensive connections to whom the mission was entrusted. Moreover, representatives of the Chinese Navy warned him that lack of finances would be a problem and that Beijing wasn’t supportive of this project. It was a gamble. Xu conducted the operation brilliantly.
Works on turning Varyag into Liaoning aircraft carrier began at a shipyard in eastern Chinese city of Dalian in 2005. The new Chinese aircraft carrier joined the Navy fleet in September 2012.
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