The Chinese business group which has agreed to buy Aston Villa football club admitted on Friday that it controlled only one listed company, not the five previously claimed in a press release.
The admission raises questions about the due diligence on Tony Xia, the businessman behind the deal. He is chairman of the Recon Group, a Beijing and Hangzhou based private holding company which controls 75 per cent of Lotus Health Group, a large producer of the food additive MSG.
On the website of the Aston Villa football club, a biography of Mr Xia — posted on May 18 when the sale was announced — reads: “Recon Group is a privately owned holding company that owns the controlling interest in five publicly listed companies on the Hong Kong and Chinese stock exchanges.”
The Recon Group website appears to show the group has several listed subsidiaries, however stock exchange filings show that Recon Group only has a significant stake in Lotus Health.
A Hangzhou-based spokesman for Recon reached by telephone on Friday, who identified himself only as Mr Jin, admitted the company “currently only has controlling share in Lotus Health”.
Meanwhile, he said: “The acquisition deals for the remaining four companies are still being finalised and should come out soon.” He declined to name the companies.
The Recon Group said the mistaken information contained in the press release had been the result of a “miscommunication” with Aston Villa, and they would ask the football club to change the wording of the statement.
The information raises questions not just about the truthfulness of the claims surrounding Mr Xia’s business dealings, but about the financial health of Mr Xia’s business group, which agreed this week to pay an undisclosed sum for Villa.
Last month, Lotus — Recon’s only verifiable asset — announced it had made a net loss in 2015 of Rmb508.5m ($77.6m) on revenues of Rmb1.7bn, compared with a net profit of Rmb23.9m the previous year.
Lotus produces 150,000 tonnes of MSG, exporting to more than 70 countries every year, according to Shanghai stock exchange filings, as well as other food additives.
Recon Group’s other revenues were unclear as the group does not appear to have ever published an audited financial statement.
In addition Mr Jin denied an assertion by Steve Hollis, Villa’s Chairman, who was quoted on Thursday saying that Mr Xia had helped to build the Bird’s Nest Olympic stadium in Beijing.
“Again, you need to ask him but he is responsible for the Bird’s Nest in Beijing and some of the other major iconic developments in China” Mr Hollis was quoted in an article in the Birmingham Mail.
“Xia was never involved in the planning or designing of the Bird’s Nest stadium. Xia’s expertise is in urban design” said Mr Jin.
A spokesman for Aston Villa confirmed that Mr Hollis was accurately quoted, but said he was not sure what information Mr Hollis was citing.
