Yili incident

Deception is a drawn knife that hurts when the truth comes out. Apart from the alleged misappropriation of public funds, it will take some time for the truth to come out whether Zheng Junhuai, the chairman of Yili Company, deceived the state and shareholders and engaged in a disguised management buyout.

With the deepening of the reporter's investigation, the root of the Yili incident gradually surfaced: the inherent weakness of the "entrepreneurial hero", the imperfect corporate governance structure and the corrupt soil provided by the MBO led to the emergence of the Yili crisis. Experts said that these weaknesses of Yili are of universal significance in China's current economic life, and I hope that through the analysis of the Yili incident, some useful enlightenment can be drawn.

The Glory and End of "Entrepreneurial Heroes"

What kind of person is Zheng Junhuai? In Hohhot, the reporter heard various statements. There is no doubt that he is a capable man. Along the way, a small dairy factory with an annual profit and tax of less than 50,000 yuan has rapidly developed into a leading enterprise in agricultural industrialization in China, and has long maintained the image of excellent blue-chip stocks that investors are flocking to. Zheng Junhuai led the Yili people to create extraordinary brilliance in the past 20 years.

At the same time, some people familiar with Zheng Junhuai commented that he was an arbitrary person. Within the company, Zheng Junhuai, who has the aura of "godfather", kept his promise. Even the major investment activities such as spending 300 million yuan to buy government bonds have not been discussed by the board of directors. Independent directors of the company were dismissed after different voices.

It is said that Zheng Junhuai is still a domineering "godfather" in the detention center. Not only did he refuse to sign the arrest decision, but he also issued a heroic lament that "if so-and-so were still here, you wouldn't dare to check me like today."

There is also a saying that Zheng Junhuai is an able person, but the development and growth of Yili can not be separated from the full care of local governments and the loose economic policies of the state.

Some analysts hit the nail on the head and pointed out that Yili was not fatally hit after Zheng Junhuai's accident, and the relevant departments are actively supporting the new management of the enterprise to tide over the difficulties. There are indications that "trend leaders" like Zheng Junhuai in the old economic era are facing the threat of being eliminated by the new economic tide. Perhaps it is a sensitive and subtle unbalanced psychology that leads them astray.

The corporate governance structure is "scattered in form and spirit"

Since the listing of 1996, although it has been tempered by the market for many years, the perfect corporate governance structure, as the core of modern enterprise system, has always been "scattered" in the company.

Professor Wang Dongjing, director of the Economics Department of the Central Party School and doctoral supervisor, told the reporter that a perfect corporate governance structure includes shareholders' meeting, board of directors, board of supervisors and managers. All the components have clear responsibilities and checks and balances, forming a stable company management and operation structure. These elements of corporate governance structure exist in Yili, but unfortunately they have not played their due role. Zheng Junhuai is not only the chairman, but also the party secretary and CEO. Management, personnel and operation are shouldered, and individuals are highly centralized, so it is difficult to balance the power of corporate governance.

Jiang, director of the Institute of Economics of the Academy of Social Sciences in Inner Mongolia Autonomous Region, said that a sound corporate governance structure is conducive to the internal and external supervision of the company and enhances the transparency of the company. There is a saying abroad that listed companies are "glass houses", which means that the company's operation and performance should be fully disclosed to the public, providing necessary reference conditions for investors to make investment decisions, and at the same time accepting supervision. Zheng Junhuai and others were suspected of misappropriating150,000 yuan as early as 2000, and it was not discovered until 2004, which shows that the company's information is opaque. In the final analysis, the corporate governance structure of the company is "scattered in form and scattered in spirit"

It should also be pointed out that the absence of financial supervision is also one of the reasons for the Yili incident. The four shareholders of Huashi Trading, the fourth largest shareholder of Yili, are all relatives of Yili executives such as Zheng Junhuai, but such important information has never been known. Ba Shusong, deputy director of the Financial Research Institute of the State Council Development Research Center, said in an interview that it will be one of the key points of securities supervision this year to obtain and monitor the information of listed companies, company executives and major shareholders through modern means.

Management buyout, beware of legal high-voltage lines

Recently, individual capital, such as MBO and disguised MBO, is full of reports of Yili incident. MBO, that is, MBO, is a special way of equity transfer. Managers become owners of enterprises by purchasing shares, and their work enthusiasm will be stimulated and improved. In the reform of state-owned enterprises, MBO was once very popular.

Yili, which has been heated by the media, is suspected of MBO, that is, Yili invested 300 million yuan to buy government bonds in 2002, and by the end of 2003, the company still holds 29 1 10,000 yuan of government bonds. During this period, in July, 2003, Jin Xin Trust Company, headquartered in Jinhua, Zhejiang, bought all the state-owned shares of Yili from Hohhot Finance Bureau for a total price of 280 million yuan, becoming the largest shareholder. The above two transactions happen to coincide, and the national debt can be repurchased into capital at a discount in the market at any time. Coupled with other reasons, people suspect that Yili executives are engaged in disguised MBO, that is, taking the company's money to buy their own shares in the company.

Experts have different opinions on whether MBO is feasible in the restructuring of state-owned enterprises. Wang Shizhou, an expert in economic law and a professor at Peking University Law School, said in an interview that MBO is not feasible in the restructuring of state-owned enterprises. He said: "The most basic thing is that the legitimate wage income of state-owned enterprise leaders is not much. Buying a company ranges from hundreds of thousands to tens of millions and hundreds of millions of yuan. Where did he get so much money? "

Most scholars believe that MBO provides corruption opportunities for some leaders of state-owned enterprises, but experts also warn those who are eager to move, such as embezzlement of public funds and unclear sources of huge amounts of property, waiting for desperate people to engage in management buyouts, and be careful to touch the high-voltage line of the law.

"Achievement and honor belong only to the past." The big slogan hanging on the second floor of Yili Group headquarters is very eye-catching. When the reporter left Hohhot, he thought, I hope the pain caused by this storm will become the "past" of Yili Group as soon as possible.