Executive exits get buried in corporate jargon

Chinese companies struggling with how to disclose the departure of top executives amid a nationwide crackdown on corruption are adopting the favored euphemism of corporations in the United States: personal reasons.

On Saturday, China Minsheng Banking Corp cited "personal reasons" for the resignation of its president as media reported he was under investigation by authorities. A month earlier, developer Kaisa Group Holdings Ltd said its chairman was quitting for "health reasons", triggering a default on one of its loans. The company is being probed for links to a former Shenzhen security chief under investigation for alleged graft, two people familiar with the matter said.

China is waging the broadest crackdown on corruption in decades, leaving publicly traded firms scrambling for precedents in what and how they should disclose. More than 70 top executives at State-owned enterprises were busted last year, including some listed in Hong Kong, according to the People's Daily.

Minsheng said the resignation of its president would not affect the company's operations. A spokesman for Kaisa declined to comment.

In 2012, China Glass Holdings Ltd said an independent director quit due to "health conditions and other personal reasons", which turned out to be a corruption charge relating to another company. He was acquitted last year.

This is not a new problem. In May 2007, the Hong Kong Stock Exchange and the Hong Kong Institute of Directors called on listed companies to be more forthcoming. "Detainment by the police or other authorities" does not qualify as personal, they said.

Just a month later, the State-owned oil refiner China Petroleum& Chemical Corp, more commonly known as Sinopec, said then-chairman of the board Chen Tonghai was leaving for "personal reasons". Media reports said he was being probed for corruption and he was later given a suspended death sentence for taking 196 million yuan ($31 million) in bribes.

In 2008, Gome Electrical Appliances Ltd - then China's biggest electronics retailer - initially denied reports that billionaire founder Huang Guangyu was under investigation by authorities. Even after Beijing police confirmed that China's richest man at the time was being investigated for "economic crimes", a company spokesman insisted "you should take information on the stock exchange as the correct information".

Huang was sentenced to 14 years in prison in 2010 for bribery and insider trading.

"Opaque resignations have been a sore point for Hong Kong-listed issuers," said Michael Cheng of the Hong Kong-based Asian Corporate Governance Association. "This is certainly something that the Hong Kong regulators should take another good look at."

In 2012, the Securities and Futures Commission of Hong Kong got the power to levy civil sanctions for failure to disclose price-sensitive information in a timely manner.

The situation is not always clear cut, Cheng said. Corruption investigations are often done in secret or covered by statutory secrecy, as in the case of Hong Kong's graft-busting agency, the Independent Commission Against Corruption.