Ultrasonic Executives Leave Quietly In Mystery China Disappearance

Shoemaker's CEO and COO leave no tracks as they abscond with the kitty. They are not the first; short sellers have discovered that corruption theft and fraud in Chinese companies offer a perfect path to profits.



Frankfurt listed Chinese shoemaker Ultrasonic AG has become the latest Chinese company to report the disappearance of top executives.



Ultrasonic said Wednesday Chief Executive Qingyong Wu and Chief Operating Officer Minghong Wu went missing at the weekend and that most of the company's cash reserves in China and Hong Kong had also disappeared. However on its website Ultrasonic says it is holding a "relevant six-figure amount" to meet current obligations.



Cologne based Ultrasonic AG is the German holding of China's Ultrasonic-Group. It listed on Frankfurt Stock Exchange in December 2011. Its shares were some 70 percent down in Wednesday midday trading, at around 1.80 euros ($2.33).



The company's 1,400 employees manufacture sandals and slippers, and what it terms urban footwear. Sales topped 163 million euros in 2013, generating net profits of 35 million euros.



Nomura credit fate uncertain



Ultrasonic recently obtained a $60 million (46 million euros) credit line in Hong Kong from Japan's Nomura, raising worries about the fate of the money in view of the company statement that Hong Kong funds are "no longer in the company's range of influence".



Ultrasonic finance chief Kwong Clifford Chan is said to be in talks with authorities and business partners to clarify the situation. Nomura has arranged a conference call with the loan's backers on Thursday.



Rampant corporate malfeasance in mainland companies



Earlier this year another German listed Chinese manufacturer filed for insolvency after its CEO suddenly went missing. It is only one of a string of boardroom who-dunnits which have helped make Chinese markets a paradise for short sellers.



Among those hit, Tianhe Chemicals was targetted after hackers claiming to belong to Anonymous accused it of falsifying financial statements. Menswear company Fujian Nuoqi's shares suddenly slid 33 percent in July - a month later its CEO vanished amid talk he had run up massive debt.



Hong Kong based shareholder activist David Webb told Reuters that China is still a developing market with a weak rule of law. He says shareholders need to discount risk of corruption and fraud into any deals.



bew/uhe (Reuters, Ultrasonic.de, dw stock market correspondent)