China's Ping An eyes legal action after NYT reports on premier's family wealth

China's second-biggest insurance company has threatened to take legal action against the New York Times for reports that Premier Wen Jiabao's relatives had accumulated massive wealth, largely through holdings in the firm.

In a written statement on Monday, Ping An Insurance (Group) Co of China Ltd said it had "noted recent media coverage related to the company, which contains serious inaccuracies, facts being distorted and taken out of context, as well as flawed logic".

It added that it "will take appropriate legal action commensurate with the damage and adverse impact the media reports have caused to the company".

Ping An did not name the New York Times Co in the statement, but a Ping An spokesman told Reuters that it referred to a New York Times article published over the weekend.

The New York Times issued a report in October, citing corporate and regulatory records that it said showed Wen's family had amassed massive wealth during his time in power, the biggest source of which it said was large stakes in Ping An.

On Saturday, it issued a follow-up report, saying that in 1999, Ping An Chairman Ma Mingzhe wrote to Wen - who was vice premier at the time - and another official, imploring them to relax rules aimed at containing risk in the financial sector that would have required a breakup of the company.

Ping An remained intact, and relatives of Wen eventually came to control Taihong, a company that acquired a large stake in Ping An in December 2002, eight months after the waiver on breaking up the company was granted, the Times said.

The price paid by Taihong was one-fourth that paid by HSBC Holdings PLC for a stake it bought two months earlier, the Times added.

The Times said it was not clear whether Wen had personally intervened on behalf of Ping An's request for a waiver, or if Wen was even aware of the stakes held by his relatives.

"We stand by our story," New York Times spokeswoman Eileen Murphy said in an email to Reuters, adding that the company did not plan to comment further at this time.

Lawyers representing the family of Premier Wen have rejected claims by the Times that relatives had accumulated at least $2.7 billion. A Foreign Ministry spokesman declined to comment directly on Monday, but previously the ministry had criticized the paper's investigation, saying it "smears China and has ulterior motives".

Since its initial report on the wealth of Wen's family in late October - including documents that showed the premier's mother had holdings of $120 million worth of Ping An stock in 2007 - the newspaper's English and Chinese language websites have been blocked in China.

The website of Bloomberg news has also been blocked in China since it reported in June that the extended family of president-designate Xi Jinping had investments in companies with assets of $375 million, and an 18 percent indirect stake in a company with $1.7 billion in assets.

(Published by Reuters - November 26, 2012)