Date
23 July 2017
Fosun chairman Guo Guangchang went missing for a week early this month but eventually reappeared. The same is unlikely to happen to a company's financial documents once they vanish. Photo: HKEJ
Fosun chairman Guo Guangchang went missing for a week early this month but eventually reappeared. The same is unlikely to happen to a company's financial documents once they vanish. Photo: HKEJ

Missing executives, missing books

A question often asked toward the end of the year is: what have we missed this year?

Many Chinese companies missed quite a lot in 2015 — it has become quite fashionable for a firm not to be able to locate its boss or important documents.

Consider China Animal Healthcare Ltd. (00940.HK), which makes vaccines and other drugs for livestock and poultry.

It came up with a creative excuse for delaying the publication of its annual financial results.

The troubled company, which has been suspended from trading since March, told investors all its financial records for the last four years were stolen by a thief from a truck when its driver went on a lunch break.

That’s right. All gone. Big theft. Probably first of its kind in the world, unless it happened in a James Bond movie.

Here is the account of the incident from the horse’s mouth:

“On 3 December, the Group made arrangements to transport the Lost Documents back to the Group’s head office in Beijing for collation in order to facilitate, among other things, the Forensic Investigation.

“At around noon of the same day, the Truck broke down and was towed to a car repair garage in Qingyuan District for repair.

“On 4 December at around 11:30 a.m., the driver of the Truck picked up the Truck from the garage after repair and went for lunch at a nearby restaurant. The Truck driver discovered after lunch that the Truck was stolen.

“Immediately after the Incident took place, the Group made a report to the local public security bureau and sent staff to search for the Truck in the direction the Truck had gone according to the road monitoring system of the local public security bureau.

“According to the local public security bureau, thefts such as the Incident are common occurrence in the Qingyuan District.”

On Wednesday, China Animal Healthcare clarified that the stolen documents included only those in Shijiazhuang, but not those stored in Inner Mongolia and Shanxi.

It also said the truck is in fact a small commercial vehicle, as opposed to the large vehicle the description in the announcement seemed to suggest.

This curious case followed a similar occurrence in which China Shanshui Cement Group Ltd. (00691.HK) reported it could not retrieve important information, including financial details, amid a boardroom fight.

Coming toward the end of the year, these incidents highlight the specific risk investors face in dealing with Chinese companies.

Amid Beijing’s efforts to fight corruption, not just documents have gone missing, but an increasing number of executives have been disappearing, their companies at a loss as how to contact them.

One high-profile case was that of Fosun International Ltd. (00656.HK) chairman Guo Guangchang, a man dubbed China’s Warren Buffett because he has orchestrated a series of major acquisitions including those of insurance companies.

A week after he vanished, Guo reappeared in his Shanghai office after reportedly assisting authorities with an investigation.

Now you know why we must say “Happy New Year” and send our best wishes to people while we have the chance, before they go missing.

And of course, to our loyal readers who make sure not to miss our daily musings: Happy New Year!

– Contact us at [email protected]

BK/JP/FL

EJ Insight writer

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