Chairman of Shanghai Electric Resigns

By AP Posted 21 August 2006 @ 03:03 pm EET     Print     Reprint     E-Mail     Comments

SHANGHAI (AP) - The chairman and two directors of Shanghai Electric Group, a state-run maker of power-plant equipment, have resigned amid an investigation into alleged misuse of public funds, the company said Monday.

Wang Chengming, 58, left the company as of Friday, Shanghai Electric said in an announcement posted on the Web site of the Hong Kong Stock Exchange. It said Han Guozhang and Zhang Rongkun, both executive directors, had also resigned. All three resignations were said to be "for personal reasons."

The announcement came amid reports that central Communist Party investigators had settled in for an extensive probe into allegations of financial abuses linked to one of Shanghai Electric's pension funds.

The company has sought to distance itself from the scandal, which also resulted in the dismissal of the head of the city's Labor and Social Security Bureau for alleged bribe taking.

Last week, the city's top Communist Party official, Chen Liangyu, urged vigilance against graft, branding the allegations as "severe violations of state financial discipline."

Trading in Shanghai Electric's shares was suspended on Aug. 14, when the industrial equipment maker said that Wang, Han and Zhang had been detained on suspicion of violating unspecified Communist Party rules and regulations.

As is typical with such affairs, the government and the company concerned have disclosed few details.

Shanghai Electric said it had appointed its deputy secretary-general, Xu Jianguo, as Wang's replacement as chairman both of its parent company and its Hong Kong-listed subsidiary.

The company, a state-run manufacturer of generators, elevators, boiler-turbine units for power plants and reactor components for nuclear power plants, is a supplier to major projects such as the Three Gorges Dam.

The company says the investigation and management changes have not affected its operations or finances.

"The investigations don't involve the assets and funds of the listed company," Xu told reporters at a news conference in Hong Kong. "As to what problems they have, I don't know."

On Friday, Shanghai Electric reported that its first-half net profit rose 42 percent over a year earlier to 1.17 billion yuan ($146.9 million), helped by strong sales of power equipment.

The company has seen its share price rise nearly 49 percent since its stock began trading in Hong Kong in April 2005.