Date
17 October 2017

Graft probe ripples across troubled COSCO waters

Delisting is a very real threat for China COSCO Holdings Co. Ltd. (01919.HK, 601919.CN) after being in the red for the past two years.

The last thing it needs is a government investigation involving a top executive, purportedly for corruption.

In a terse announcement on Thursday, the country’s largest bulk carrier and its sibling, China International Marine Containers (Group) Co. Ltd. (02039.HK), confirmed that Xu Minjie {徐敏杰}, who serves on the board of both companies, is under investigation by regulatory authorities.

Xu, 54, is an industry veteran and a rising star in China’s shipping industry. Before being promoted to senior management in COSCO Group, he had been vice chairman of COSCO Pacific Ltd. (01199.HK), the container terminal unit of China COSCO.

The investigation is probably in connection with corruption during his tenure in COSCO Pacific from 2007 to 2011, 21st Century Business Herald quoted an insider as saying.

The news comes as former chairman Wei Jiafu {魏家福} is reported to have been barred from leaving the country.

Details about these market-moving developments are scant but few analysts doubt that these will weigh on the group’s efforts to turn its fortunes around, notwithstanding assurances from the company that the investigation will not have a major impact on its operations.

Unfortunately, China COSCO does not have much time to spare. Under listing rules, any company that incurs three successive years of losses will be delisted.

– Contact the writer at [email protected]

RA

 

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