Fifteen years ago, as the head of China research at UBS, I was threatened by two Chinese companies listed on the Hong Kong Stock Exchange. One of the two, Greencool Technology, sued me and my employer for libel. The other, Euro-Asia Agricultural Holdings, was equally threatening. I had written negative researchon both companies, and their stock prices had tanked as a result.
Within two years, both companies, which boasted market values of billions of dollars at their peak, had gone bust. And then the chairmen of the day — Gu Chujun of Greencool and Yang Bin of Euro-Asia — were put behind bars in China.
Was justice served? No — at least, not completely. Both chairmen were punished for their criminal offences. But in neither case was their fraud in the capital markets mentioned, let alone punished. The large numbers of investment bankers, auditors, directors, corporate executives involved have escaped proper scrutiny. Worst of all, neither the relevant government departments nor the public have learnt a lesson.