New | Leak reveals China Cosco discipline chief’s despair over corruption, nepotism and failure to make profit
Leaked minutes of a meeting reveal China Cosco’s new discipline inspection head pointing out corruption and nepotism in the country’s largest shipping company.
The leak comes just before a possible announcement of a merger between China Cosco and rival China Shipping.
The minutes of the closed-door meeting were reported by Beijing Daily’s official Wechat account and reproduced by news outlets at the weekend. Media websites and social networks deleted the minutes soon after.
China Cosco’s authorised representative, Liang Hong, said she could not authenticate the meeting.
According to the minutes, Xu Aisheng, China Cosco’s newly appointed discipline inspection head, said at the meeting that high rents of ships and other major investment mistakes had caused huge losses for the state-owned shipping operator, and made it party to illegal activities.
“We are asking all units for accountability,” Xu is shown as saying.
Xu said the group had used up to 20,000 freight brokers, 56 of whom were prohibited by regulation, including some related to the secretary of the group’s party committee and the sister of a party committee leader’s key aide.
Hong Kong- and Shanghai-listed China Cosco posted a record average loss of 10 billion yuan (HK$12.2 billion) in 2011 and 2012, and has since barely managed to stay in the black by selling assets.
Golfing and unnecessary travel by company bosses, irregular hiring and delayed retirement were some of the other key issues raised by Xu.
Xu used to serve as the National Audit Office’s department head of fixed assets investment audit and has participated in several anti-graft investigations, including the infamous railway corruption case that sent former railways minister Liu Zhijun to prison.
Xu was appointed to Cosco’s party committee and discipline inspection head in July for a one-year term.
A large number of high-rent ship contracts are believed to have pushed China Cosco into the red, resulting in the downfall of former executive director Xu Minjie and two management-level executives of subsidiary Cosco Dalian.
“Japanese dry bulk shipping lines are facing the same difficulties, yet they can make money, why can’t you?” Xu is recorded as saying at the meeting.
Both China Cosco and China Shipping suspended stock trading on August 10 over potential merger talks.
A component of the national strategy to restructure state-owned enterprises, the merger is expected to be announced by the end of the year.
Xu shed light on the merger in the speech, saying the two companies’ top managements had met the previous week to work on the merger plan.
But the plan made no mention of strengthening the Communist Party’s supervision and leadership which, he said, was a serious mistake.
