There couldn't be a better tombstone to mark the 20th anniversary of the listing of mainland state-owned enterprises (SOEs) in Hong Kong than the handling of the graft allegations against Song Lin, chairman of China Resources.
It would read: "State firms have grown big enough - in relative and absolute terms - that no one in our financial arena dares to touch them until Beijing comes in."
The allegation that listed subsidiary China Resources Power (CRP) had overpaid for some Shanxi mines was made public three months before a Xinhua reporter pointed the finger at Song on Wednesday.
On March 19, four national newspapers reported CRP had paid more than 10 billion yuan (HK$12.6 billion) - 50 per cent above peer valuation - for the mines, the exploration licences for which had expired.
On April 15, six shareholders repeated the allegation in a Hong Kong newspaper advertisement, demanding more information. On July 5, they brought the case to Hong Kong's courts, suing all CRP's directors for breaching their fiduciary duty.
The Hong Kong press reports of all these events were met with total silence. Before Wednesday, CRP made no announcement. When pushed by the media, it insisted there was nothing that met the disclosure threshold.
Regulators expressed no concern. Analysts wrote no reports.
Even when the Xinhua report came out, the company remained adamant that it had nothing to disclose. Specifics did not emerge until Thursday.
No, you cannot say this is just how it is with SOEs. A look at the handling of a no less serious incident in 2003 will show you it was not always like this.
In that case, the press found the terms of a HK$2 billion loan from the Bank of China (Hong Kong) to a Shanghai property developer peculiar and questioned whether the bank's management had been bribed. The loan was peanuts on BOCHK's books. Yet, after a lunch with the bank's management, three top analysts issued reports expressing concern about its internal controls and transparency. Regulators echoed their concern to reporters.
Within days, the bank disclosed every detail of the loan. The next day, a special committee was formed by its independent directors and a retired top regulator to review its internal controls. The committee published a report of its findings.
Why have our standards slipped over the past decade?
Sadly, the reason is that while China was chasing money 10 years ago, it's now the other way around. When you account for only 10 per cent of the Hang Seng Index, you pamper the press and investors. When it's more than 50 per cent, why bother?
After all, transparency, accountability and good governance have always been alien to China's top state enterprises.
Fund managers may be unhappy, but they haven't much choice. China is the game of the day, and there aren't many proxies for this mammoth economy. Private enterprises are too risky. SOEs have poor governance, but they never go bust.
Anyway, in a distorted economy like China's, the ups and downs of stock prices have more to do with policies and insider information than a company's fundamentals.
In the past three months, CRP outperformed the market - until the Xinhua report, the appearance of which signalled a bitter power struggle.
In such a case, no analyst will win many clients and ranking votes with a critical report on an SOE's corporate governance.
On the contrary, a cordial relationship with the company's management pays off. It may not guarantee a tip-off, but at least you won't be excluded from any briefings, in particular the pre-results briefing commonly held by SOEs.
Besides, your bonus as an analyst is tied to the number of SOE managers you can bring to the investors' conference of your investment house. That matters when turnover is low, as we've seen in recent years.
How about the regulators? To get a mega state enterprise to come clean requires determination, connections and guts.
I don't doubt their determination. However, with Hong Kong now the supplicant for listings and favourable policies, our regulators' access to the top has been significantly reduced.
As for guts, it's about handing an SOE's manager a phone when he says a state leader wants a hush-up of a case and telling him to call the statesman so you can hear the order from the horse's mouth.
That's rare, these days.