China Packaging Group is one of the telling cases.

Established by Fujian-based entrepreneur Yang Zongwang, the company said it was the country's fifth-largest food can producer with 500 million yuan cash in the bank.

Yet, in April 2009, its auditor said the company's principal bank in Fujian had refused to reveal its loan record, cash was withdrawn without supporting paperwork, and deals were struck with Yang's wife without disclosure.

Bank claims followed. Six months later, the firm appointed a provisional liquidator. Unsurprisingly, all but one of its seven directors had resigned days before that, claiming commitment to other career developments or personal reasons.

Its mainland directors have disappeared from the public domain but most of its Hong Kong directors and financial controller had not. (See table)

They have not only kept their jobs in other listed firms but also secured new appointments. Interestingly enough, the firms they worked for subsequently experienced either financial irregularities or poor results.

More interestingly, their employers are all from Fujian, just like Yang. GEM-listed First Credit is the only exception.

Among the Fujian employers is sportswear maker Meike International, which hired Li Yik-sang as company secretary less than a month after his leaving China Packaging's financial controller job.

One may wonder how word of mouth works within the complicatedly intertwined Fujian business circle in the hiring of managers and directors. Investors, meanwhile, are simply not told about their history.

The liquidation of China Packaging was not even mentioned in any of these companies' disclosure. In fact, in most cases, their involvement with China Packaging has been omitted.

For example, building material producer China Golden Phoenix International published in its listing prospectus details of Li's accounting experience with no mention of his job in any listed company.

China Packaging is one of many listed firms that failed after the 2008 financial crisis.

"Recycling" can be seen among directors and managers of other failed companies such as Fu Ji Food and Catering Services.

To be fair, the listing rules do require companies to disclose if a director had been the director or manager of a company subject to liquidation procedures. That covers liquidation that happens within 12 months after one's departure.

However, as always, this is subject to interpretation. It may not apply to the appointment of a financial controller and company secretary. Companies can also claim ignorance.

Penalties for non-disclosure are rare. In August 2011, reported that an independent director of five listed companies had failed to disclose a public censure against him by the mainland regulator.

Following the report, he resigned from the companies, but our regulator has not announced any action against him.

Failing in the governance of a company is not the end as long as you have good connections.