Embezzlement with Chinese characteristics
Shang Fulin (pictured), the chairman of the China Securities Regulatory Commission, was unusually forthcoming in a recent article published in Caijing magazine celebrating the 20th anniversary of the mainland's capital markets. Quoting Karl Marx's observation: 'In capitalism, trust is the main foundation for the metamorphosis of private companies into joint stock companies,' he went on to say that, 'Compared to mature markets, China's system of trust is still immature.'
He admitted that embezzlement of funds from listed companies by their state-owned parents was a serious problem a few years ago. He related a story of how one Chinese state-owned enterprise tried to embezzle funds from its listed subsidiary which complained that it wasn't right.
Executives at the parent apparently retorted: 'How many shareholders does the listed company have? We're a state-owned enterprise and behind us are all of China's 1.3 billion citizens. We're not embezzling funds, we're just taking money for the public use.'
According to Shang the number of embezzlement cases and the amounts involved have declined by 90 per cent over the past two years due to stricter measures by CSRC. Let's hope that's because embezzlement is declining and not because its getting harder to detect.
Fruit of the vine
