BEIJING, CHINA - DECEMBER 11: (CHINA OUT) Li Hejun, Chairman of Hanergy Holding Group, attends the 2013 China Central Television (CCTV) Financial Forum at China World Trade Center Tower III on December 11, 2013 in Beijing, China. The three-day forum opened on Tuesday ahead of the "2013 CCTV China Economic Person Of The Year Award". (Photo by ChinaFotoPress/ChinaFotoPress via Getty Images)
Li Hejun, founder and owner of Hanergy

Hong Kong’s securities watchdog has confirmed Hanergy is under investigation — hours after the troubled solar panel maker’s chairman dismissed any such probe as “purely rumour”.

The Securities and Futures Commission has up until now been mute on the subject despite media speculation and even as Hanergy’s share price soared and then, in the space of half an hour last week, virtually halved.

In a statement released on late Thursday afternoon, the regulator said: “The SFC wishes to clarify that a formal investigation into the affairs of Hanergy Thin Film Power Group Limited has been active and is continuing.”

It was nudged into action by Li Hejun, Hanergy’s chairman, who made his first appearance in a video interview with Xinhua since last week’s shares crash.

The SFC said it issued the statement “given the public interest following reports denying such measures have been taken”.

In the interview with Xinhua, China’s official news agency, Mr Li lashed out at reports that followed the spectacular crash of its share price, which wiped nearly $19bn off Hanergy’s market capitalisation.

He said: “We can say that in Hanergy has never in its history been better than it is today, our business is prospering, and this is a great time for Hanergy.”

The fall came on the same day Mr Li did not attend the company’s annual shareholder meeting, leading rumours he might have been detained by authorities.

In his interview Mr Li said it was impossible for any investigation to be under way without his knowledge — a sentiment undermined by the SFC statement.

Tight-lipped HK regulator

Hong Kong Securities and Exchange Commission (SEC) logo

The one-line confirmation from Hong Kong’s markets watchdog that it was probing the affairs of Hanergy Thin Film Power was only the second live investigation it has confirmed in more than six years.

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“This is purely rumour, there is no such possibility,” he said. “I would be the first to know if the authorities were really planning a probe. But I know nothing about such news.”

A spokesman for Brunswick, the PR agency representing the unlisted Hanergy Group, said: “We have not been instructed in this matter.”

Calls for comment to representatives of Hanergy Thin Film were not returned immediately.

Mr Li, in the Xinhua interview, also appeared to address concerns that he had used shares of the company as collateral to secure loans, saying the company did not owe overdue bank loans or interest payments to any bank.

“We never did before, we don’t now and I believe we won’t in the future,” he said.

Two days before HTF’s shares plummeted, a Financial Times investigation showed Mr Li had pledged millions of his shares in the company as collateral to secure a $200m loan from Chinese state-owned investment manager China Huarong Asset Management.

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Li Hejun
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HTF’s share price enjoyed a startling rate of growth in recent months, increasing 500 per cent from January 2014 to last week. It catapulted Mr Li to the top of China’s rich list and propelled HTF’s market value to at least five times that of its nearest competitor, First Solar of the US.

Analysts have raised questions about the company’s business model. The listed company is heavily reliant on sales to its parent company, Hanergy Group, which is also owned by Mr Li. The group also has a history of waiting for long periods before settling the sales booked by its subsidiary.

Additional reporting by Jennifer Hughes in Hong Kong

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