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China extends graft investigation into shipping industry

A Chinese national flag flies in front of COSCO's headquarters in Beijing August 26, 2010. REUTERS/Barry Huang
A Chinese national flag flies in front of COSCO's headquarters in Beijing August 26, 2010. REUTERS/Barry Huang

HONG KONG (Reuters) - China's campaign to root out deep-seated corruption has now extended into the shipping industry, after the country's largest bulk shipper, China COSCO Holdings Co Ltd, said the government was probing one of its top executives.

Vice president Xu Minjie was "under investigation by the relevant authorities", COSCO said in a brief statement to the Shanghai stock exchange on Thursday, using shorthand generally used in China to describe corruption probes.

It gave no details other than to say the move would not have a big impact on the company, whose operations it said were continuing as normal.

Calls to the company's headquarters in China seeking comment went unanswered.

A Chinese shipping industry website had earlier reported that Xu was under investigation for corruption. The story was later removed from its website, though other Chinese news portals continued to carry it.

Chinese President Xi Jinping has identified corruption as a threat to the ruling Communist Party's very survival, and has launched a sweeping campaign against it, vowing to take on both top-level "tigers" and lowly "flies".

As part of that campaign, China launched a series of graft probes into the energy sector, announcing in August and September that five former senior officials of the country's biggest oil firm, China National Petroleum Corporation, had been put under investigation for "serious discipline violations".

Xu is believed to be the first person from China's shipping industry to be caught up in Xi's crackdown.

Xu is a shipping industry veteran of more than three decades, according to his resume on COSCO's website.

COSCO has been hit by a weakening global economy and a supply glut of ships since the beginning of 2011, though it appears to be on track to return to black this year, despite analysts noting uncertainty due to lingering oversupply.

COSCO last month reported a net loss of 1.04 billion yuan ($171 million) in July-September, according to Reuters' calculations, narrowing from a 1.5 billion yuan shortfall a year ago.

The company, controlled by state-owned China Ocean Shipping(Group) Company, has posted losses for two consecutive years, and a third year would trigger a delisting from the Shanghai stock exchange.

COSCO Chairman Ma Zehua said in August that, with the global dry bulk market improving in the second half, the company was confident of turning a profit for the full year of 2013 after a narrower first-half net loss.

COSCO has sold its logistics business, stakes in a container manufacturer and office properties so far this year to try to return to profitability.

COSCO also controls port operator and container leasing firm COSCO Pacific Ltd.

($1=6.0927 Chinese yuan)

(Reporting by Yimou Lee; Writing by Ben Blanchard; Editing by Clarence Fernandez)

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