Top executives of German company in China vanishes with cash
17 September 2014
A Germany-listed shoemaker is the latest Chinese company to report the disappearance of top executives, highlighting the danger of doing business in the Asian powerhouse at a time of heightened scrutiny of the corporate governance of the firms, Reuters reported.
According to Frankfurt-listed Ultrasonic AG, the whereabouts of chief executive Qingyong Wu and chief operating officer Minghong Wu were not known since the weekend, and most of its cash reserves in China and Hong Kong had disappeared.
The mystery is likely to increase worries about corruption and corporate malfeasance in the world's second-biggest economy, as shortsellers increasingly targeted smaller Chinese companies with claims of falsified financial statements and other dubious practices.
"Most of the company's cash funds at PRC (People's Republic of China) and Hong Kong levels have been transferred, being no longer in the company's range of influence," Ultrasonic said in a statement.
It added, its German holding company still held a "relevant six-figure amount" at hand to meet its payment obligations.
Ultrasonic shares tanked 72 per cent in heavy volume yesterday after the announcement, closing at €1.798.
There were fears over a $60 million credit facility which the company, valued at $29.5 million, secured from Nomura International (Hong Kong) Ltd in August to help fund acquisitions.
Reuters reported two banking sources confirmed the money had gone.
The embezzlement comes after the said on Friday that its COO, Minghong Wu, would take a six-month leave of absence for health reasons, Business Insider reported.
According to the announcement CEO Qinyong Wu would assume the COO's responsibilities.
Adding yet another bizarre turn to the events, the same announcement that said its COO would take leave of absence, also said, Chan, the company's CFO would step down for family reasons on 30 September.
The company's investor relations site says Ultrasonic is "China's Urban Footwear Company." Ultrasonic AG, listed on the Frankfurt exchange, is a German corporate with a registered office in Cologne, Germany. The company is owned 100 per cent by China Ultrasonic Outdoorwear Holdings, which is based in Hong Kong.