Fired Ultrasonic CEO Borrowed Company Cash for Own Use

The chief executive officer of Ultrasonic AG, fired last week after he disappeared and the shoemaker’s cash went missing, said he borrowed company money for personal use and planned to pay it back later this month.

“I borrowed some money from the company but not large amounts, just small amounts,” Wu Qingyong, founder of the Frankfurt-listed Chinese company, said in an interview yesterday in the southern city of Xiamen.

Wu was dismissed on Sept. 18 along with his older son Wu Minghong, the chief operating officer, after Ultrasonic announced their whereabouts were unknown and most of its cash had been transferred away and was “no longer in the company’s range of influence.” It’s unclear if the money Wu borrowed is the same as that which Ultrasonic said was missing.

Shares of Ultrasonic fell as much as 26 percent, and was down 22 percent to 2.03 euros as of 12:30 p.m. in Frankfurt trading. The stock has plunged from 6.25 euros on Sept. 16 before the company announced it couldn’t find the two key managers. The incident marked the second time an executive from a Chinese company listed on the Frankfurt Stock Exchange had disappeared this year, spurring investor concerns.

“I needed money for temporary use, but not much, and I was definitely going to return it,” said Wu, who wore a short-sleeved checked shirt and had deep bags around his eyes. He didn’t say how much money he borrowed and didn’t respond when asked how he spent it.

Insolvency Procedures

The former CEO contacted Chief Financial Officer Clifford Chan last weekend “claiming that he would return to the company and that he would also return the funds,” Ultrasonic said in a statement to the Frankfurt Stock Exchange on Monday. It said Sept. 18 insolvency procedures were imminent due to the incident.

Hong Kong-based Chan didn’t pick up calls to his office today and his mobile phone was switched off. Ultrasonic’s investor relations department didn’t immediately respond to e-mailed questions about the elder Wu’s comments.

The company’s main factory complex is located in a village outside Xiamen, surrounded by empty plots and half-completed buildings.

An Ultrasonic worker, who would only give his surname Chen, said local authorities had assured employees they would get paid, though salaries might be delayed. Some of his coworkers planned to quit, he said.

Personal Use

Wu’s younger son Wu Mingjun, who was also in the interview, said they had borrowed the money “for personal use” and had told Ultrasonic’s finance department. Wu’s older son Wu Minghong, who was also fired, was not at the interview.

Wu Qingyong resurfaced in China last weekend and told Chinese web portal in a video interview posted on Sunday that reports he absconded with several billion yuan were “purely rumors”.

Wu, who still holds a 52 percent stake in Ultrasonic, said yesterday he hadn’t disappeared and was on holiday in Hong Kong. He then traveled to the Philippines, and said he couldn’t be reached because he lost his mobile phone while in Manila.

The Xiamen Quanzhou Chamber of Commerce, which represents about 2,000 companies in the region, indicated it was willing to advise and support Wu and Ultrasonic, including talking to creditors and banks so the business can keep going. Other local businesses had financial difficulties as well, its executive deputy secretary Lu Yida said yesterday.

On Aug. 1, Youbisheng Green Paper AG, also listed in Frankfurt and located in Quanzhou, said it replaced Chief Executive Officer Haiming Huang after he disappeared. It started preliminary insolvency proceedings two weeks later.

“Some companies go bankrupt and some managers run away -- who can give them a hand, save them and help them to overcome their difficulties?” said Lu, who sat next to Wu during the interview. “Our chamber has decided to assist them to solve their problem.”