China Mobile Fires Vice Chairman for ‘Irregularities’

01/09/10

Permalink 11:44:20 am, by dacare, 541 words, 805 views   English (US)
Categories: Leaders on the Move

China Mobile Fires Vice Chairman for ‘Irregularities’

Jan. 8 (Bloomberg) -- China Mobile Ltd. fired Vice Chairman Zhang Chunjiang from the world’s largest phone carrier by market value citing “alleged serious financial irregularities.”

Zhang was voted off China Mobile’s board at a meeting of its members yesterday, according to a company statement that gave no details of allegations against him. The latest edition of Caijing Magazine reported the former executive was being investigated for falsifying earnings and hiding losses while he was an executive at another Chinese telecom company.

Zhang was ousted from parent China Mobile Communications Corp. after a Xinhua News Agency report Dec. 26 said the Central Commission for Discipline Inspection of the Communist Party of China, the nation’s main anti-corruption body, had made him the subject of an investigation over an unspecified “serious disciplinary breach.” His firing will not affect China Mobile’s operations, said Peter Ho, an analyst at Quam Ltd. in Hong Kong.

“I think Zhang’s going will have little impact on the company,” said Ho, an analyst at Quam Ltd. in Hong Kong. “The company has a good management team in place and he is not a key member.”

A China Mobile spokeswoman in Hong Kong, Rainie Lei, declined to discuss the nature of the “economic issues” faced by Zhang beyond saying they won’t affect the company.

Shares in China Mobile rose 1.6 percent to close at HK$74.45 in Hong Kong trading, extending gains made since the corruption investigation was announced to 6.7 percent. The benchmark Hang Seng index, which rose 0.1 percent today, has advanced 3.8 percent in the same period.

Under Scrutiny

Zhang was under scrutiny by the commission for possible misdealing at China Netcom Group Corp. before he joined China Mobile, Beijing-based Caijing said without saying where it got its information. Zhang could not be reached through the main line of the company’s Hong Kong office.

Netcom may have overstated its profit by 20 billion yuan ($2.9 billion) cumulatively before Zhang left the company in 2008, the Jan. 4 issue of the magazine said. The matter was uncovered by China Unicom (Hong Kong) Ltd. according to the report. Sophia Tso, a spokeswoman for China Unicom, which took over Netcom as part of a government revamp of the telecom sector in 2008, declined to comment on the report.

The former executive, aged 51 according to Caijing, was removed from his posts as Communist Party secretary and vice- president at China Mobile Communications, Hong Kong-listed China Mobile said in an e-mailed statement Dec. 31.

Zhang was named Communist Party secretary at China Mobile Communications in May 2008, when the government ordered the country’s six biggest phone carriers to merge in a reorganization aimed at boosting competition.

Senior Position

The post gave him a more senior position in the state-owned company’s hierarchy than chief executive Wang Jianzhou, industry consultant Duncan Clark said Dec. 30.

Before his tenure at Netcom, Zhang was director of telecommunications administration at the Ministry of Information Industry.

China Mobile Communications owns 74.3 percent of the Hong Kong-listed carrier, which named Zhang as its vice-chairman in June 2008 following his appointment at the parent company.

The probe won’t “materially impact” China Mobile’s business given Zhang’s short tenure at the company, Goldman Sachs Group Inc. analysts Helen Zhu and Lucy Liu wrote in a Dec. 27 report.

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