CITIC shuffles board

CITIC has agreed to double the number of executive directors and retain chairman Wei Mingyi in a bid to strengthen financial controls, a spokesman said.

Wang Jun, 51-year-old son of late vice-president Wang Zhen, is to become a vice-chairman said a spokesman for the China International Trust and Investment Corporation (CITIC), Beijing's multi-national investment bank.

Mr Wang, who previously held the position of president of the company, joins existing vice-chairmen Lu Xuejian and Yang Guangqi.

The number of executive directors was increased from three to six.

Newcomers are Hong Yungcheng, 66, responsible for group finance; Huang Jichen, 62, in charge of overseas business; and Qin Xiao, 48, in charge of internal administration.

'The moves have been made to strengthen management,' said Guo Zepei, chief of the public relations division.

Earlier reports suggested Mr Wang might replace 71-year-old Mr Wei as chairman under a central government policy of promoting younger leaders.

A CITIC spokesman dismissed reports of Mr Wei's retirement as unfounded. However, any formal announcement of Mr Wei's retirement would have to wait for State Council approval since CITIC is a ministry-level company under central Government control.

'I think the Chinese are trying to strengthen their control over CITIC and other big groups,' a Western banker said.

'They cannot afford any more scandals and losses so they are trying to beef up their control systems. After all, look what happened to Barings. Even Britain's oldest merchant bank did not have enough,' he said.

Another Western banker in Beijing said CITIC hoped to boost internal controls by increasing the number of executive directors.

'It is quite unusual for an investment bank like CITIC to have only three. Six is still small but is closer to what happens in a similar Western corporation,' he said.

Until the weekend meeting, the three executive directors on the board were Wang Jun, Rong Zhijian and Jing Shuping.

But some Beijing analysts thought it would be surprising if no one was forced to step down to take responsibility for losses of US$40 million (HK$308.80 million) in unauthorised metals trading in the Shanghai division.

'If someone took responsibility, that would mean CITIC would be behaving more like any international group. If they are playing by international rules, someone should put their head on the line,' one resident foreign banker said.

As China's largest overseas investor, accounting for 18 per cent of China's total foreign investments, guarding its reputation abroad should be a high priority.

Rapid acquisitions abroad exposed it to accusations of not doing enough to fulfil original objectives of channelling Western technology and funds into China.

Some critics charge that its management has preferred speculating overseas on ventures promising higher profits to long-term infrastructure investments.