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King met Chinese financier deemed security risk by Nato ally

Charles explored making a deal with Kenny Song, a Beijing-based businessman with links to state-owned companies

Charles hoped Kenny Song would contribute £10 million that would help him repay a £20 million loan used to build a village near Dumfries House

Charles hoped Kenny Song would contribute £10 million that would help him repay a £20 million loan used to build a village near Dumfries House

The King met a Chinese financier for President Xi’s Belt and Road Initiative whose work was later deemed a national security risk by a Nato member state.

Charles dined with Kenny Song after courtiers were told the Beijing-based businessman could contribute £10 million to bail out his failed property scheme.

The King welcomed Song to a private black-tie dinner at Dumfries House, his country estate in southwest Scotland where he has hosted ministers and foreign dignitaries, in late 2018.

 

Dumfries House, a large estate with formal gardens and fountain.
Dumfries House / ROBERT PERRY/PA
 

Under a proposed deal, Song would have invested in nearby Knockroon, a development that was supposed to repay the £20 million loan Charles’s charity took out to purchase the 18th-century estate.

 

Prince Charles unveiling a foundation stone at the Knockroon housing development.
Charles at Knockroon in 2011 / SUNDAY TIMES PHOTOGRAPHER JAMES GLOSSOP
 

Knockroon remains a ghost town due to a lack of demand, which has forced Charles to fundraise privately to settle his charity’s debts.

According to sources, Song said he could help facilitate the construction of cheap modular homes by Chinese state-owned corporations. 

The deal fell through soon after Song attended the dinner. He says he had a friendly conversation with the King, but that a lack of potential buyers for the homes meant the proposal was never commercially viable. He was never prepared to give to the King’s Foundation, which owns Dumfries House and developed Knockroon, on a purely charitable basis.

 

Man smiling while sitting in a blue sports car.
Kenny Song has created seven companies in the UK, three of which have been forcibly struck off
 

A source with royal links had a different recollection, claiming that both parties’ lawyers had entered talks and were drafting a memorandum of understanding, only for Song to “disappear” without explanation. They also said Charles’s aides became concerned about the financier’s links to the People’s Republic. It is unclear if this came before or after the deal petered out. 

Song, 52, later used a photograph of his visit to Dumfries House in a business brochure. In the image, he appears in black-tie next to William Bortrick, a fixer who was close to the palace and had previously arranged an honour for a Saudi donor to Charles.

 
 
Song with Bortrick
Song with Bortrick
 
 

At the time of the talks, Song was behind plans for Chinese state-owned enterprises to build the world’s longest tunnel, linking Tallinn and Helsinki, the capitals of Estonia and Finland, under the Baltic Sea.

He described his company, Touchstone Capital, as a “platform” for the Belt and Road — Xi’s signature foreign policy initiative that Theresa May, who was then the prime minister, had recently refused to endorse amid concerns about Chinese foreign influence. 

Song had pledged to raise €15 billion for the tunnel, saying it would create a “centre of gravity connecting Asia and Europe”.

 

Diagram of the proposed Helsinki-Tallinn tunnel.
Plans for the tunnel project, which was blocked for “security reasons”
 

However, in 2020, Estonia blocked the plan, with Jaak Aab, its minister of public administration, citing “security reasons” among others. Its foreign intelligence service concluded that Belt and Road was designed to cement China’s status as a “global superpower” and specifically detailed Song’s business activities and apparent links to Chinese state-owned firms.

A Finnish minister said this year that the project was “unrealistic” and no longer a priority.

Song has run into trouble with the authorities elsewhere. In the UK, he has created seven companies. Three were forcibly struck off the register, three were dissolved with no assets, and the only active entity, Touchstone Capital Group Holdings, has a county court judgment against it for unpaid debts.

According to the Open Source Centre, he also runs companies in Hong Kong, some of which have directors based in Macau, the Chinese gambling hub. He lists several Chinese state-owned firms among his “global partners”, including two construction giants sanctioned by the United States for their links to the People’s Liberation Army.

A palace source noted that Song’s name appeared in the Estonian intelligence report two years after he met Charles. They said the two men did not have a one-on-one meeting, pointing out that dinners at Dumfries House often include 50 guests. They added that the pair had no personal relationship. 

A spokesman for the King’s Foundation said: “It would be false to suggest any donation was ever made or offered by Mr Song.”

The disclosure comes days after the Duke of York was found to have built a close personal relationship with Yang Tengbo, an alleged Chinese spy. MI5 concluded that Yang posed a threat to national security, citing his activities as an example of the Chinese Communist Party’s tactic of “elite capture”. 

Charles is said to be furious with Prince Andrew, who has agreed not to attend the royal family’s Christmas lunch at Sandringham.

Asked what due diligence took place before or after Song visited Dumfries House, Buckingham Palace would not say. 

However, it is understood Charles met Song after conversations brokered by Michael Fawcett, his former valet who ran the Prince’s Foundation at the time. Fawcett later quit after a “cash-for-honours” scandal for which the charity remains under investigation. 

One source said that Song had expressed a keen interest in meeting Charles to pitch his idea to him directly. 

Song said it was more spontaneous, recalling: “I went there, I just wanted to check the project, and they said, ‘OK, we have dinner’. I said ‘OK’.” He stayed in private accommodation on the grounds that night. After realising the charity expected a donation, and did not have any buyers for the proposed properties, Song claims he told the King’s team: “Sorry, I cannot do anything.” A source said Fawcett later became dismayed that Song had been able to meet Charles, given his links to the Chinese state.

The Knockroon development, near Cumnock, Ayrshire, was never completed and many of the homes that were built ended up being used to accommodate staff from Dumfries House. 

 
Prince Charles and President Xi Jinping in conversation.
Charles with President Xi in London / JUSTIN TALLIS/REUTERS
 

The Belt and Road strategy is the cornerstone of Xi’s foreign policy which he has used to lure countries away from the West. He unveiled the global infrastructure initiative in 2013, since which time Chinese state-owned and private companies have poured an estimated $1 trillion into energy and transport projects.

At the start, it had two prongs: the “Belt” — connecting China to Europe through central Asia — and the “Road”, referring to maritime routes linking Chinese ports with Africa, Asia and Europe. Part of the objective was to offer countries an alternative development partner to the US.

Over the past decade, Xi has expanded the project to the Middle East and South America, with 150 countries among its stated beneficiaries. He has also ploughed money into geopolitically sensitive projects such as military bases and telecommunications infrastructure. 

Critics say it has made participating countries economically enfeebled, pointing to “debt trap” diplomacy, where cash-poor states are forced to repay Beijing by granting them access to oil and minerals or leasing them strategically important ports or land, giving China a back door into countries previously aligned with the West. 

• Chinese workers killed in backlash against Beijing’s Belt and Road

After Prince Andrew’s links to the “spy” were uncovered, Sir Keir Starmer said it was “important to engage” with China before stating: “Of course, we are concerned about the challenge that [it] poses.”

Song has described Touchstone, his firm, as a “One Belt One Road Fund platform”, and says he connects “China’s central/state-owned/great private enterprises” with overseas projects. Leaked emails show that at the time of his meeting with Charles, Song had expressed interest in funnelling Chinese cash into British and Irish housing projects, with the heirs of the Guinness family among those he planned to approach. 

One former associate said Song touted his links to state-owned enterprises as he made introductions. “He always said that he represents them,” they said, referencing companies including China Railway Group, a state-owned giant. Yet they severed ties with him after years of talks about a London development that did not bear fruit. 

Another associate acknowledged concerns about his past, but said he enjoyed “a lot of backing from Hong Kong and China” and “Chinese state-owned companies”. Given his “very good relationships”, and the fact some of the entities had put money behind him before, the associate has given him the benefit of the doubt. 

The associate said his business model involved raising money against assets including mining and infrastructure projects. Examples include a gold mine in Kyrgyzstan and a petroleum hub in Ghana, according to public records. 

He appears to have adopted a similar model in the case of the Tallinn-Helsinki tunnel, which was originally conceived by Peter Vesterbacka, a Finnish software developer who created the Angry Birds gaming franchise. 

 

Group photo of Estonian Prime Minister Juri Ratas, Minister Kadri Simson, and other officials and businesspeople.
Song (second right) at a meeting with Peter Vesterbacka (second left)
 

After Song stepped in, reports emerged that three Chinese companies would build the 100km tunnel using private finance: the China Railway International Group, the China Railway Engineering Corporation and the China Communications Construction Company. All three are wholly owned by the Chinese state. 

In 2020, Estonia blocked the plan, with Jaak Aab, its minister of public administration, citing “security reasons” among others. 

Song said he had “no idea” about the basis for the conclusion that it posed a threat to national security. 

However, he has often operated at the intersection of Chinese business and politics. In 2019, he met Rumen Radev, the president of Bulgaria and an ally of Xi’s, as a “representative of Chinese companies participating in … the One Belt, One Road” initiative. Years earlier, he appeared at the Chinese embassy in Grenada — a Caribbean nation that had recently dropped its support for Taiwan — and made a speech next to the ambassador. 

Song denies any wrongdoing. On the proposed deal at Dumfries House, he said: “Before dinner, I actually took our [terms and conditions] and the guys told me: ‘If you want to meet him, you need to make an investment, donation … I said I’m sorry, I cannot do that.” After the meeting with Charles, he says, he realised that there were no buyers for the proposed properties. “From day one, actually, we asked about project details … afterwards, the conditions [and] terms cannot meet investment criteria, so we cannot make any investment,” he said.

Song continued: “We are actually an investment company, and we do different projects … [we have] no link to any government, and we are just a private company.”

He said he did not specialise in Belt and Road projects alone, stating: “We are very much based on different project portfolios … a lot of projects in different countries.” He said he had investors in China and outside of China, and that they raised money on the financial markets.

Throughout the past decade, Song has spent much of his time in London. He lists his address on Companies House as Fucheng Road in Beijing.

 

Headshot of Kenny Song at a restaurant.
Song said the fate of his companies reflected the difficult business environment in which he had operated / FACEBOOK
 
 
Although he has incorporated entities in opaque jurisdictions such as the Cayman Islands and the British Virgin Islands, he says his group is headquartered in Great Portland Street, a short walk from the Chinese embassy in Portland Place. It previously registered itself to addresses on Hertford Street in Mayfair and later an office in Cambridge.

Like the rest of his companies, Touchstone Capital has never published detailed financial information. Song says Touchstone had the structure of a partnership, with shareholders based in and outside of China, and that it is not technically owned by him. 

The disclosures pose questions about how and why Song has incorporated businesses in the UK. A person does not need to be a British national or resident to create a UK company. 

They will also renew scrutiny of the links between the royal family and foreign governments. Charles has looked not only to China to bail out his charities, but Middle Eastern kingdoms, including Qatar, whose former prime minister once handed him millions of pounds in bags of cash, and Saudi Arabia, the home of Mahfouz bin Mahfouz, the controversial tycoon who was promised a CBE and received one after making charitable donations. 

Song said his string of dissolved or struck-off companies reflected the difficult business environment in which he had operated. He said many of his investors were based outside of China and that he was interested in business, not politics. He said the company expelled from Luxembourg’s stock exchange was owned and run by an associate who had asked him to serve as a director, that the Brazilian venture had used his company name but was not run by him, and that the court order related to a debt which had arisen during Covid. 

Fawcett declined to respond.

 

 
 

Author: Gabriel Pogrund, Whitehall Editor | Dipesh Gadher, Home Affairs Correspondent

Source: The Sunday Times

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