Imagi International, the Hong Kong animation firm that briefly topped the U.S. box office in 2007 with “TMNT,” has said that two of its mainland Chinese directors have gone missing.
The company revealed on Friday that it has lost contact with its chairman Shan Jiuliang and a non-executive director Wen Di, both from China. Shan has not been heard of since mid-October. Wen has not been contactable since Nov. 8.
In China such disappearances are widely assumed to be arrests made in connection with the various corruption probes that are mushrooming in number under President Xi Jinping. Details of the allegations, which service is holding the person and even where the person is being held are rarely revealed.
Earlier this month one of China’s most prominent businessmen, Guo Guangchang was reported as missing by Fosun International, a property of the entertainment conglomerate that owns stakes in Jeff Robinov’s Studio 8, Cirque du Soleil and Bona Film Group. Guo resurfaced only four days later on Dec. 14 and has since been seen in New York, but Fosun has said little about Guo’s enforced absence.
The Imagi and Fosun revelations fit a growing pattern of Hong Kong-listed companies which are being affected by the actions of the Chinese judiciary authorities.
Patrick Liu Chunning, head of Hong Kong-listed Alibaba Pictures Group, was detained this summer, apparently as part of an investigation into bribery claims when he was an executive at social media giant Tencent.
Unlike Fosun, where the company asserted that Guo’s temporary disappearance would have no material impact, Imagi revealed that a special committee was set up in November “to protect the company’s interests and assets.”
A board meeting was rescheduled from November to December at the request of Zhang Peng, Shan’s wife and fellow company director, in order to allow Shan to attend. But after Shan failed to turn up to the new meeting, the company moved into crisis mode, with the special committee also taking charge of Imagi’s “day-to-day business.”
Shan and Zhang are senior directors at Kunming Fanya Metal Exchange, a privately controlled platform for trading “minor metals” such as antimony and bismuth, and rare earths, such as indium, its biggest product. Wen is also Fanya’s chief financial officer.
Fanya has been embroiled in scandal for the past year as some 80,000 investors claimed they have lost $5.6 billion (RMB36 billion). Others investors have said that Fanya, which also expanded into asset management, was a fraud, little different to a pyramid-selling scheme. In August, Shan was reportedly kidnapped at a Shanghai hotel by angry investors who had lost money on his exchange. He was released after a few hours after promising to sort things out.
Shan, Zhang and Wen took effective control of Imagi in 2014 after a spectacular decade-long rise and fall that resulted in restructuring and write-offs totalling over $100 million.
Imagi was previously known as Boto and, when Hong Kong still had a manufacturing sector, was once the world’s largest producer of artificial Christmas trees. In 2000 its previous management invested in a newish animation firm and by 2002 had ditched the humdrum manufacturing sector altogether.
The animation venture they built in its place was probably ahead of its time — Chinese-made cartoons have leaped in quality in only the past five years — but it was nothing short of ambitious. It sought to create a Chinese-Hollywood hybrid, combining U.S. toon talent with Asian costs. Comparisons with Pixar were frequently to be heard.
Experienced staff were hired from DreamWorks, Disney and Pacific Data Images to oversee pre- and post-production from Sherman Oaks, Calif. While a full-scale animation pipeline was built in Chai Wan, at the Eastern tip of Hong Kong Island, to pump out animated features for global audiences.
The new Imagi released its first picture, “TMNT,” written and directed by animation veteran Kevin Munroe, as a spinoff from the 1980s cartoon series. Produced at a cost of some $35 million, it enjoyed one week at the top of the North American box office, and grossed $96 million worldwide, with distribution by Warner Bros. and The Weinstein Company. That score lifted the shares of the company to a point where Imagi was briefly the most valuable entertainment company listed in Hong Kong.
But the management was unhappy with the distribution results and sought to take more control and more risk on its second wholly-owned picture, the $65 million “Astro Boy” derived from a Japanese anime series. (Imagi was also a co-producer with Japan’s Madhouse on 2008’s $6.5 million “Highlander: The Search For Vengeance.”) “Astro Boy” found a home with Summit Entertainment. But after flopping in the U.S. and Japan — and succeeding in China — the film’s $45 million global gross spelled big losses for Imagi.
It cancelled a version of another Japanese property, “Gatchaman,” dismissed most of the 350 staff animators in Hong Kong, and was put into liquidation in early 2010.
After two years of upheaval the company acquired a cartoon licensor Toon Express in 2011, and raised $46 million (HK$359 million). Prospects looked interesting as Toon Express and its partner CPE controlled the Chinese animation property “Pleasant Goat and Big Big Wolf.” That provided a lucrative low budget franchise with multiple hit feature films, two licenses with Disney outside China and one with iQIYI on the mainland.
But performance was not smooth. Two chief executives came and went, most of the animation businesses were sold in late 2013, leaving the company in CGI and property investment. In July 2014 Shan and Zhang bought in to the company for $70 million (HK$543 million.)
The year that followed their arrival has been terrible.
Two directors were prosecuted for illegal short selling of the company’s shares, Imagi tipped back into losses, and, it emerges, that Shan and Zhang have operated Imagi for their own personal benefit.
In August, Shan used Imagi to pay two years worth of rent amounting to $930,000 (RMB6 million) on an office in Xiamen, China for another company that he and Zhang co-own. Imagi is trying to revoke the tenancy.
In October, Shan used Imagi to make a $1.3 million (HK$10 million) loan to an unnamed third person, but he has refused requests from the board for an explanation.
And Imagi has sought to freeze and retrieve $10.2 million (RMB65 million) from a Chinese subsidiary, at which Shan was the only authorized signatory.
Variety called Imagi’s Hong Kong office for comment, but was bizarrely told that the office was closed for an unspecified Chinese holiday. Emails have been unanswered.
In its Dec. 17 filing Imagi says that Zhang “thought many parts of [Imagi’s] announcement are inconsistent with the facts, she disagreed with the contents of the announcement; and she did not agree with the publication of the announcement prior to checking clearly the facts.”
However, “prior to the publication of this announcement, she has not responded to any of such requests [to explain her disagreements].” Her whereabouts are unclear.