Chinese-muddy-waters
2015-05-22 10:20阅读：
Financial Times, 21 May 2015,
by Joe Zhang,
A Cautionary Tale of Chinese Muddy Waters.
Fifteen years ago, as the head of China research at
UBS, I was threatened by two Chinese companies listed on the Hong
Kong Stock Exchange. One of the two, Greencool Technology, sued me
and my employer for libel. The other, Euro-Asia Agricultural
Holdings, was equally threatening. I had written
negative research on both companies, and their stock
prices had tanked as a result.
Within two years, both companies, which boasted market
values of billions of dollars at their peak, had gone bust. And
then the chairmen of the day —
Gu Chujun of Green
cool and
Yang Bin of Euro-Asia — were put behind bars in China.
Was justice served? No — at least, not completely. Both
chairmen were punished for their criminal offences. But in neither
case was their fraud in the capital markets mentioned, let alone
punished. The large numbers of investment bankers, auditors,
directors, corporate executives involved have escaped proper
scrutiny. Worst of all, neither the relevant government departments
nor the public have learnt a lesson.
To me, sleepless nights were not the only damage I suffered
from the case. I have endured censure from many of the hundreds of
retail and even institutional investors. They blamed me for their
financial losses: had I not raised questions about these troubled
companies, they might have unloaded the stocks in good time and in
doing so booked tidy profits — or so they argued. Many questioned
my motives; some even asked whether my employer held short
positions in the shares, meaning it would benefit from plunging
prices.
In those days, despite the high-profile court cases and widespread
media coverage of my role, no government agency ever asked me about
my doubts regarding the two companies. They never inquired about
the investigative field trips — to check out whether, say, certain
factories were indeed producing the widgets they said they were
producing — that sparked my concern. I was largely left to fend for
myself. Having become known as a “black mouth” — someone who calls
public attention to corporate wrongdoing — I received strange,
sometimes hostile, stares of recognition on the streets of Hong
Kong and big Chinese cities.
My employer, UBS, was one of my few sources of support. It not only
funded my legal bills but also allowed me to continue in my job. My
colleagues in the equity sales, wealth management and investment
banking departments also faced negative comments from customers,
including rich individuals, fund houses and corporate
clients.
Today, I am the chairman of a company that is publicly quoted in
Hong Kong, and I sit on the boards of others. Laws and rules for
public companies and their directors are clear, if tedious. But in
my view there is still far too much tolerance in the government and
among the Chinese public at large about illegal and improper
behaviour in the capital markets.
Everyone seems to agree that stealing money is both a crime and
ethically wrong; yet when it comes to stealing money from crowds
(the market), or from a large number of strangers (again, the
market), our moral judgment is somehow less clear if we are not the
direct victims. Even when we are the victims, the sense of
grievance fades very quickly. Illegal and improper behaviour is
sometimes even admired as financial engineering or deft use of
ingenious skills.
When large numbers of people throw rubbish in the street and we
tolerate it, we should not be surprised to find that our streets
are as dirty as they are. When polluters go unpunished, we must be
prepared to live in a toxic environment — and we do. Likewise when
the regulators clamp down on stock market manipulation, many in the
public seem at best uninterested — with predictable consequences.
When the anti-corruption drive began to unfold in China two years
ago, parts of the business world seemed concerned mainly about a
negative effect on the health of the economy. They invoked the old
saying: “If the water is too clean, you will not catch any fish”;
or, to put it another way, the creatures will survive only in
“
muddy waters”. The inference is: “Do not be too
hard on crooks or corrupt officials. Do not be too strict on
friends. No one is perfect.”
Corporate governance has greatly improved in this part of the world
in the past 15 years. But in my judgment there is still much more
the regulators can do. Some kinds of wrongdoing in the capital
markets are almost public knowledge. The only thing the government
needs is more resources, more talent and more determination. A
market overseen by tough regulators benefits all.
The writer is chairman of China Smartpay Group Holdings Limited
and author of ‘Inside China's Shadow Banking’
