Chinese Communist Party controlled company had major stake in Australia's healthcare system

In 2018, Primary Health Care Limited changed its name to Healius Limited. By January 2019, Jangho had increased its stake to 15.9%.

Medical records of Australian Defence Force personnel came dangerously close to falling into the hands of the Chinese Communist Party.

The story began innocently enough with Dr Ed Bateman, a GP, listing his two-practice, $12 million revenue company Primary Health Care on the Australian Securities Exchange in 1998.

After building Primary Health Care Limited to 71 medical centres, 168 diagnostic imaging sites, 98 pathology labs, and 1,992 pathology collection centres, Ed Bateman died in September 2015 and his sons James and Henry succeed.

Now, it’s not every day that a critical medical asset underwritten by the Australian government’s Medicare system comes onto the market like this.

China, at the very beginning of its program to acquire Australian companies, smacked their collectivist lips and hatched a plan. 

This began a five-year push by the Chinese Government to take control of Australia’s second largest healthcare provider.

On the face of it, it sounds like any other corporate transaction. Not so fast.

The campaign came eleven weeks later on Christmas Eve 2015 and ended in December 2020.

Chinese building façade company, Jangho Group, quietly began buying Primary Health Care.

From that strategically-timed launch, it only took the Chinese Communist Party owned company sixteen weeks to acquire 11.17% of the publicly listed Australian healthcare provider. This made them the largest shareholder.

In 2018, Primary Health Care Limited changed its name to Healius Limited. By January 2019, Jangho had increased its stake to 15.9%. 

Let’s just pause here to consider how breathtaking this was.

A Chinese Communist Party controlled company in the building sector, with no articulated reason or expertise for wanting to buy a healthcare company in Australia, became the largest shareholder of the second largest Australian healthcare provider. It strikes during a succession event and achieves this is 16 weeks!

Now in the box seat, Jangho makes a takeover bid. 

The bid has the usual conditions. It’s subject to raising the funds, Jangho board approval, and both Chinese and Australian regulatory authority. 

However, the strike price is set at a one third premium on the trading price of the day. And that one third premium is after Healius’ shares rose 7% on the news of the bid.

So it’s opportunistic. It’s daring. It’s early into the Chinese push to acquire strategic Australian assets. 

But now concerns are raised behind closed doors. You’d be forgiven for thinking the concerns would be that Healius provided significant healthcare to the Australian Defence Force. You’d have thought that having naval, air force and army personnel medical records sitting in the digitized archives of Healius would be the main worry. You’d think they’d consider whether the Australian Government would allow the takeover to proceed.

No.

They were primarily concerned about the bid price. They saw it as an insult, “significantly undervalues” our assets were the words.

You could defend the suits. You could argue that geopolitics is not their responsibility. Their role was to maximise shareholder value. 

Fair enough. But who is asking what strategic advantage could be gained by the mandarins behind Jangho if sensitive information like this could be extracted?

There was a time when virtuous corporate leader, usually veterans themselves, would patriotically ask that question at the very least.

Not any more.

We can speculate with some confidence what the Chinese would do with such information. 

Either way, Jangho persisted for one further year before, in February 2020, giving up its attempt. First it tried to sell its 99 million shares in Healius to Swiss banker, Partners’ Group, via an option. The option expired in October 2020, leaving Jangho stuck.

By December 2020, Jangho exited Healius for good with a $331 million sale arranged by the Australian arm of Jarden’s, an investment banking and advisory firm established in 1961 by former All-Black, Ron Jarden. We don’t know whose money replaced the Chinese. No-one in government is asking.

Why does any of this matter to everyday Australians?

China recently threatened Australia’s security with talk of missile launches and used its trade with Australia as a geo-political weapon. Ask wine exporters and beef graziers. China does not play the same game as Australia and the West. 

Australia was two steps away from making defence personnel medical records accessible to a communist regime which acts as an adversary. The two steps are approval by a publicly listed company board and by the Treasurer through the Foreign Investment Review Board.

Over the last 5 years, we have seen the lack of vigilance by corporate boards in many different ways. We are all for free enterprise, but corporate boards of late have not been the institutions we rely on for free enterprise’s underpinnings. Are today’s boards the custodians of freedom and fair play? Do we see fraud, postmodernist white-anting, modern slavery practices and lawlessness? Or are they more likely to do deals with China while that country threatens us? 

So, it comes down to government and the Treasurer of the day to protect our national interest. Look no further that our ports and rail-to-mine infrastructure to understand just how tenuous this singular protection is. 

by Kenelm Tonkin