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The Mystery of Vanishing Chinese CEOs

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The Mystery of Vanishing Chinese CEOs

how-to-disappear-book-coverIn a trend that appears to be somehow in connection with China's far-reaching anti-corruption efforts, many of the country's biggest companies have seen their CEOs simply disappear from the face of the earth.

In most of the cases, there is still no explanation of the departed executives whereabouts.

"Ongoing Investigations"

poofAlthough there is nothing to confirm where these CEOs may have gone, or even whether or not they are still alive, the chances are good that they are being held for questioning by the Communist Party. In all likelihood, none of them have been "disappeared" in mafia terms. They are imprisoned by the ruling party so that they cannot "interfere" in investigations. In other words, the government holds them and questions them indefinitely in an attempt to secure confessions of corruption or information that will lead to other potential culprits.

The most recent CEO to become "unreachable" is Guo Guangchang, the billionaire chairman of Fosun International, Ltd. He is far from the only high-profile corporate executive to mysteriously disappear. Yim Fung, the chief executive officer of Guotai Junan Securities Co., also vanished recently, as did two executives for Citic Securities. These are some of China's biggest firms.

Bloomberg illustrates how bad the trend has gotten:

". . . the Chinese word for unreachable—shilian, which means 'lost contact'—has become a euphemism in China for the party holding executives and officials for questioning or arrest, often indefinitely and at an undisclosed location. That practice has long been criticized by human rights activists who say the lack of transparency and accountability opens the door to abuses such as torture."

cop-arrestThese detentions are carried out by an agency called the Central Commission for Discipline Inspection, a key part of President Xi Jianping's anti-corruption campaign.

Even more telling, there have been several prominent executives detained and subsequently released without any charges. It would appear that these individuals provided useful information or were never involved in what the government was investigating; yet, upon their release, neither the freed executives nor the government would confirm that they had been questioned. This opaque behavior is part of why torture and intimidation are suspected.

Implications

The rounding up of potential criminal CEOs sounds (in principle) like a straightforward anti-corruption effort. To the Chinese public, this is exactly how to the party propaganda portrays it. However, with a reputation for heavy-handed behavior, the ruling Communist Party of the People's Republic does not have the benefit of the doubt on its side.

china-flag-shanghaiWith such a secretive program of rooting out corruption, outsiders can't help but assume that the ruling party is careful to keep its own involvement in graft and corruption under wraps. It's easy to see that secret interrogation and torture can lead to false confessions, or how quietly making people "vanish" makes the government look it's creating scapegoats and covering its own tracks.

While this is merely speculation, there's no doubt that the rash of important executives becoming "unreachable" raises questions about how open the Chinese economy—let alone Chinese society—is.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.

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