Gone Missing: When Chinese Companies Lose Track of Their Leaders

Guotai Junan International Says Unable to Reach CEO
  • Founder Securities ex-chairman said to have assisted a probe
  • China Aircraft Leasing CEO resigned during annual leave

In the age of email and cellphones, it ought to be unusual for companies to lose touch with their senior executives for long periods of time.

Not so in China, where Hong Kong-listed Guotai Junan International Holdings Ltd. on Monday became the latest Chinese-owned firm to announce it had been unable to contact a senior executive, triggering a sharp retreat in the share price.

The unit of Guotai Junan Securities Co., one of China’s largest securities firms, appointed temporary replacements after saying it was unable to reach Chairman and Chief Executive Officer Yim Fung since last Wednesday, according to a statement issued to the Hong Kong stock exchange.

The reasons for Yim’s disappearance are unclear and on Tuesday Guotai Junan declined to comment further. But Guotai is by no means the first company to have issued such a statement about a missing executive. From the start of this year through Sept. 6, 34 listed companies on the mainland have had senior executives disappear or face probes by the authorities, the Securities Times has reported, citing its own calculations.

Here are details of five recent cases:

  • Founder Securities Co.: Lei Jie, the former chairman of the firm and its joint venture with Credit Suisse Group AG, was released a few months ago from police custody after going missing in January, according to a person with knowledge of the matter. Jie’s release, unreported until Tuesday, came after he assisted with a government probe, said the person, who asked not to be identified because there was no formal announcement of the move. Founder Securities said in January it couldn’t contact Lei after he asked for a week of sick leave. He was replaced as chairman and removed from the board. Reached by phone Tuesday, Lei confirmed he’s no longer involved with the joint venture, but declined to comment further. Shares in the company were little changed in Shanghai on Jan. 23, after the firm said that it couldn’t contact Lei, and have since dropped 18 percent. In September, Founder said another executive was also out of contact. Reached on Tuesday, a Founder Securities representative declined to comment further.

  • Hong Kong-listed China Aircraft Leasing Group Holdings Ltd.: Chief Executive Officer Poon Ho Man resigned by letter during his annual leave in June and the firm said on June 19 he could no longer be contacted. He was under investigation as part of a corruption probe, which doesn’t mean he’ll be charged, people familiar with the matter told Bloomberg later that month. The firm’s stock plunged 19 percent on June 19 and has since declined another 14 percent. The company’s media representative declined to comment.

  • China Minsheng Banking Corp.: In late January, Caixin magazine reported President Mao Xiaofeng was unreachable after being taken away to assist with an investigation. The stock fell 3.1 percent on Feb. 2 in Hong Kong, after the bank said Mao had resigned for “personal reasons,” and his situation had nothing to do with its operations. The shares have since slipped another 15 percent. There’s been no further official word on Mao. A Minsheng Banking press officer didn’t answer calls to his mobile or reply to text messages on Tuesday.

  • Ningbo Zhongbai Co.: The department-store operator said on Nov. 3 it couldn’t contact Chairman Xu Jun to verify media reports about his personal connection with hedge-fund manager Xu Xiang, who is under investigation for alleged insider trading according to the official Xinhua news agency. The company’s stock rose 3.3 percent on Nov. 4 in Shanghai, the day after the statement, and has since gained an additional 13 percent. On Tuesday, a company investor relations officer had no update on the situation and couldn’t give any new information on the chairman’s whereabouts. No formal charge of Xu Xiang has been announced.

  • Industrial waste firm Dongjiang Environmental Co.: The company said Oct. 30 that it was unable to reach Chairman Zhang Wei Yang and had been told by his family that he was under investigation. The company’s shares slumped 17 percent when they resumed trading on Nov. 16 in Hong Kong and have since recovered slightly. On Tuesday, a company investor relations officer said he had nothing to add to the Oct. 30 statement. No announcement has been made of any charge against Zhang.

— With assistance by Jun Luo

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