China’s campaign to root out corruption has now extended into the shipping industry, after the country’s largest bulk shipper, China COSCO Holdings Co Ltd (中國海運), said the government was probing one of its top executives.
The shipper’s vice president Xu Minjie (徐敏傑) was “under investigation by the relevant authorities,” COSCO said in a brief statement to the Shanghai stock exchange on Thursday, shorthand that is used in China to describe corruption probes.
Former COSCO Group chairman Wei Jiafu (魏家福) has also been prevented from leaving China, the Beijing Times said in a report citing unidentified company sources that was reposted by the Xinhua news agency.
Several shipping industry sources also said Wei had been banned from leaving the country.
COSCO gave no details in its statement other than to say the move would not have a big impact on the company, whose operations it said were continuing as normal. Calls to the company’s headquarters seeking comment were unanswered.
COSCO shares fell by as much as 6.9 percent in Hong Kong yesterday to nine-week lows, and were set for their biggest one-day fall since early July.
Chinese President Xi Jinping (習近平) has identified corruption as a threat to the Chinese Communist Party’s (CCP) survival and has launched a sweeping campaign against it, vowing to take on both top-level “tigers” and lowly “flies.”
As part of that campaign, China launched a series of graft probes into the energy sector, announcing in August and September that five former senior officials of the country’s biggest oil firm, China National Petroleum Corp (中國石油天然氣), were under investigation for “serious discipline violations.”
The latest move comes as the CCP leadership prepares for a four-day plenum today to set a reform agenda for the next decade, including the potential overhaul and increased oversight of giant state-owned enterprises, including the likes of COSCO.
China International Maritime Containers Group Ltd (中國國際海運集裝箱集團), where Xu serves as a nonexecutive director, said in a stock exchange filing yesterday that the investigation “will not have material adverse impact” on the group because Xu was not involved in daily operations.
A Chinese shipping industry Web site earlier reported Xu was under investigation for corruption. The story was later removed from its Web site, though other Chinese news portals continued to carry it.
Xu, a shipping industry veteran of more than three decades, according to his resume on COSCO’s Web site, is believed to be one of the first big names from China’s shipping industry to be caught up in Xi’s crackdown.
COSCO has been hit by a weakening global economy and a supply glut of ships since early 2011, though it appears to be on track to return to profit this year, despite analysts noting uncertainty due to lingering oversupply.
COSCO last month reported a net loss of 1.04 billion yuan (US$171 million) for July-to-September, according to Reuters’ calculations. The company has posted losses for two straight years. A third year would trigger a delisting from the Shanghai stock exchange.