China COSCO Holdings Co. Ltd. said Thursday in a notice posted with the Hong Kong Stock Exchange
that it "has been informed by the controlling shareholder, China Ocean Shipping (Group) Company, that Mr. Xu Minjie, an executive director of the company, is under investigation by a relevant regulatory body."
On Friday, in a second filing it said Xu Minjie resigned as an executive director
of the company "with immediate effect due to personal reasons." It added that "Xu Minjie has confirmed that he has no disagreement with the board and the company, and there is no matter in respect of his resignation that needs to be brought to the attention of the shareholders of the company."
Xinhua, China's official news agency, said Xu is also the deputy general manager of state-owned China Ocean Shipping (Group) Company
and noted that "COSCO has been criticized by investors and investigated by the government following heavy losses in the last two years."
It said, "The company has posted the biggest losses among China's listed companies for two consecutive years. It lost 9.56 billion yuan ($1.57 billion) in 2012 after a deficit of 10.45 billion yuan in 2011.
Xinhua also said "COSCO blamed the disappointing results on the downward trend in the global shipping sector and rising fuel costs. However, analysts believe there are serious problems in its operation, management and risk control. The company's long-term deficiency is also a result of heavy investment in building freight capacity around 2008. It bet wrong on the market and pursued fast expansion, resulting in huge liabilities.
Xinhua continued, "The company was also accused of wasting money on recreational facilities. A government audit report in 2011 showed that the COSCO Group irregularly used welfare funds to build a golf course, incurring operating losses."