20 October 2016
Yim Fung has been unreachable since Wednesday last week. Photo: Bloomberg
Yim Fung has been unreachable since Wednesday last week. Photo: Bloomberg

Guotai Junan HK chief missing – another anti-corruption probe?

Guotai Junan International Holdings Ltd. (01788.HK), a Hong Kong subsidiary of China’s No. 2 brokerage, said it hasn’t been able to reach its chairman since last week.

That spooked investors and prompted its shares to tumble more than 17 percent at one point.

“The company has been unable to reach Dr. Yim Fung, chairman of the board and chief executive … since 18 November 2015,” the company said in a statement filed with the Hong Kong stock exchange.

“Dr. Yim currently cannot discharge his duties,” it said.

The firm has appointed executive director Qi Haiying as acting chairman and Wang Dongqing as acting chief executive officer.

Also known as Yan Feng in the mainland, Yim has a high profile in the city’s securities industry, including through his comments to the media and as chairman and then honorary chairman of the Chinese Securities Association of Hong Kong, Bloomberg reported.

He joined state-owned Guotai Junan Securities Co. Ltd. in 1993 and has led the Hong Kong-based branch since 2000, serving in his current positions since August 2012.

The US$20 billion Hong Kong unit is majority-owned by Guotai Junan Securities, which listed on the Shanghai stock exchange in June in China’s largest initial public offering since 2010.

Thomas Reuters figures show Yim, 52, is the Hong Kong firm’s fourth-biggest shareholder, with a stake of 0.59 percent.

“The news had significant impact on Guotai Junan stock, as the whole event remained unclear. The chairman has been missing for almost a week, which would arouse investors’ concerns,” Patrick Yiu, associate director at CASH Asset Management in Hong Kong, told Reuters.

Guotai Junan International’s use of language strikes a familiar tone.

In previous episodes of initially unexplained disappearances of senior executives of Chinese companies, they were later found to be targets of official probes into corruption or financial fraud, The Wall Street Journal said.

As with China’s “new normal” of slower economic growth, the disappearance of powerful Chinese executives is getting perversely commonplace.

Last month, Wang Qishan, China’s anti-corruption czar, said he would focus his efforts on cracking down on corruption in the financial sector following the country’s US$5 trillion summer meltdown in the stock market.

Since then, a growing number of executives have vanished, including a regulatory official who previously ran the Shanghai and Shenzhen stock exchanges, senior staff at state-owned Citic Securities Co. Ltd. (06030.HK), star private equity traders, fund managers at Yishidun International Trading Co. Ltd., the technical director at Huaxin Futures Co. Ltd., and the president of Agricultural Bank of China Ltd. (01288.HK).

As reports trickle in, individual charges have ranged from leaking information and malicious short-selling to insider trading and stock manipulation resulting in hundreds of millions in illegal profits.

Yao Gang, the regulatory official, was a vice chairman of the China Securities Regulatory Commission who formerly oversaw initial public offerings.

State media reported he is under investigation for committing “severe disciplinary violations” — a euphemism for graft.

In another case, Wang Yanxiu, the Communist Party head within the China Banking Association — a body supervised by the China Banking Regulatory Commission — was removed from that role and demoted for offenses including concealing his wife’s US citizenship, Bloomberg reported.

Other CBRC officials were punished for offenses ranging from gambling to receiving cash gifts and promoting staff in violation of party protocol.

Zhang Yun, president of Agricultural Bank of China — the world’s third-largest bank, with US$2.7 trillion in assets — is reportedly assisting officials with an investigation.

Guotai Junan International executives have had brushes with the law in the past.

Wang Dongqing, the new acting chief executive, was investigated by Hong Kong’s anti-bribery agency less than a year ago.

Independent Commission Against Corruption officers executed search warrants on his office and his home, where documents were seized.

Wang was also “invited to visit the ICAC to assist in an ICAC investigation”, the Guotai Junan stock exchange filing said.

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