How do you spell corporate governance? Some of the mainland's state-owned enterprises seem to be a bit slow to remedy a potential conflict of interest.
On April 3, state media reported that Su Shulin, chairman of China Petroleum and Chemical Corp (Sinopec), moved to Fujian as the province's party head. On April 8, the organisation department of the Communist Party announced more changes. Fu Chengyu, chairman of China National Offshore Oil Corp (CNOOC), had replaced Su at Sinopec; and Wang Yilin, the No3 at China National Petroleum Corp (CNPC), the parent of PetroChina, has filled Fu's seat at CNOOC.
Overnight, in a game of musical chairs, these top oil officials had switched jobs to their rivals. That's the life of the country's civil-servant-cum-manager.
What's the big deal for investors? The problem is while changing jobs at the parent level, they kept their old positions at the listed subsidiaries. Given the conflict of interest, one would have expected immediate resignations. But it took them at least a week to resign and they did so after this columnist sent them questions about the potential conflict.
Fu was chairman at CNOOC and now is head of Sinopec, but he remained chairman of CNOOC Limited, the Hong Kong-listed subsidiary, until he resigned yesterday afternoon. Wang was a top executive at CNPC and now is the chairman of CNOOC. But, until he resigned late on Thursday, he was director of PetroChina, CNPC's listed subsidiary.
How could they continue to be officers at the listed subsidiaries of their competitors? Their jobs include masterminding battles for market share and foreign assets.
