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A disconcerting number of Chinese corporate-governance failures have surfaced since the financial crisis — Sino-Environment, Beauty China, Oriental Century, Canton Properties and Fibrechem Technologies are just a few examples in the past year. It’s starting to add up to a trend.

Consider the similarities: The scandals have centered on high-growth mainland Chinese companies listed in Hong Kong, Singapore or London. Alarm bells have typically gone off when accountants were unable to sign off on an audit, most often due to inflated sales and unverifiable trade receivables. An alternative trigger has been the sudden disclosure that the chairman pledged his shares to a creditor, unbeknownst to shareholders and other creditors, and defaulted, thereby spurring a change in control. In rarer situations, the founder has straight-out admitted inflating his financial statements using fictitious accounts — likely pre-empting an imminent revelation, as was the case with Oriental Century.

To be sure, breaches in corporate governance are nothing new in listed Chinese companies. Investors remember how the collapse of Moulin Global Eyecare in April 2005 or of EganaGoldpfeil in July 2007 gave investors jitters for a while about small- and mid-cap companies listed in Hong Kong. What’s new now is the frequency. Rather than abating, this trend is likely to continue, and possibly worsen, as liquidity gets tighter over the next few months. It’s harder to hide misappropriation of funds or accounting fraud when perpetrators can’t round up enough cash to cover their tracks.

China’s overall loan growth will remain robust in 2010, but gradual tightening will disproportionately affect small and mid-caps, which still account for most of the corporate governance-related failures. Cos Borrelli, one of Hong Kong’s leading experts on insolvency and restructuring, has seen it all over the years and yet is unequivocal: ‘The financial crisis has brought about a Wild West mentality — in many of these situations, it’s been a free-for-all with founders or chairmen of companies in difficulty quarantining their key assets to avoid losing them to creditors and shareholders.’

That helps explain why the number of cases is high even in the context of a low point in the business cycle. While this is difficult to quantify precisely, conversations with experts in Chinese corporate restructuring turn up anecdotal evidence that the problem is worsening. And scandals seem to be ensnaring larger and larger companies that often have significant foreign ownership. The two trends are related. Most listed Chinese companies have benefited from buoyant stock markets prior to the global financial crisis. These companies funded themselves by successfully tapping into global capital that was chasing Chinese growth. They repeatedly issued shares, obtained credit from off-shore banks, and in many cases issued convertible bonds targeting international investors.

This comes at an inopportune time for Beijing. Global investor attention more than ever is tuned into China’s capital markets as investors elsewhere expect the economy to continue growing. The uptick in corporate fraud is also marring Beijing’s attempt to modernize its financial markets, having announced an ambitious plan to turn Shanghai into a global financial hub by 2020.

At the heart of the problem lies China’s bankruptcy process, which provides no consistent path forward for creditors and minority shareholders to ensure that a company’s remaining assets are secured and that their claims are recognized after a corporate-governance failure. It is often not clear which government authority is responsible for sorting through the rubble. Off-shore listings complicate these jurisdictional issues, as mainland regulators rarely recognize or enforce rulings from foreign bankruptcy authorities.

Witness Sino-Environment, a waste water-treatment company listed in Singapore. The first signs of trouble appeared in March 2009 when its chairman and CEO defaulted on a personal loan against which he had pledged his shares. A subsequent review by auditor PricewaterhouseCoopers found accounting irregularities. That led the board’s independent directors to file police reports in Singapore, Hong Kong and mainland China.
The CEO eventually resigned, along with two other executive directors, but has vowed to continue running the company’s mainland operations. Meanwhile, months after the independent directors obtained court orders in Singapore to restrain the sale of company assets, they are still seeking to secure the assets and bank accounts of the firm’s China subsidiary due to the lack of responsiveness from mainland authorities. The company has appointed a turn-around specialist as the new CEO and may well survive. But the minority shareholders’ chaotic experience illustrates the lack of effective process to address corporate governance failures.

The slew of corporate-governance problems has not yet reached a level where international investors would systematically question the veracity of reported financials from Chinese companies. But the trend must be bucked. There is no shortcut to this — Beijing needs to push reforms that will put in place a consistent and reliable bankruptcy process, made available to foreign investors and constraining the ability of insiders to seize assets when the wheels come off. Otherwise the danger is that investors will start rethinking Chinese capital markets.

自金融危机开始以来，中国公司治理失败的案例逐步浮出水面，数量之多，令人不安。中华环保(Sino-Environment)、妍华控股(Beauty China)、东方纪元(Oriental Century)、广东置地(Canton Properties)和纤化科技(Fibrechem Technologies)只是去年的冰山一角。它开始逐渐增多并成为一种趋势。

看一看它们的相似之处：丑闻主要集中于在香港、新加坡或伦敦上市的高增长的中国内地公司。警钟通常会在下列情况下敲响：大多数情况是因为虚增的销售额以及无法核实的应收账款导致会计无法签署审计报告；另一种情况是突然爆出丑闻称公司董事长在股东及其它债权人不知情的情况下将其股份抵押给其他债权人并违约，从而导致控制权易手；比较少见的情况是公司创始人坦白承认利用假帐篡改财务报告──很可能是为了在丑闻即将暴露之前抢得先机，正如东方纪元的情况一样。

当然，中国上市公司违反公司治理规定并不是新鲜事。投资者还记得2005年4月泰兴光学(Moulin Global Eyecare)或2007年7月联洲国际(EganaGoldpfeil)崩盘时，投资者曾有一段时间对在香港上市的中小盘公司避之不及。现在的不同之处在于频率。这一趋势很可能将继续下去，但不是越来越少，而是可能恶化，因为未来几个月流动性收缩的幅度将加大。一旦作弊之人无法筹集足够的资金以掩盖他们作弊的痕迹，要隐藏挪用资金或做假账的事实就变得更加困难。

2010年，中国的贷款增长仍将保持强劲势头，但逐步收紧的作法对中小盘企业影响更大。与公司治理相关的失败案例中，中小盘企业仍占大多数。作为香港最杰出的破产与重组事务专家之一，博雷里(Cos Borrelli)多年来见证了这一切，并对其心知肚明。他说，金融危机带来了一种弱肉强食的美国西部思想。许多情况下，处于困境之中的公司变得混乱不堪，公司的创始人或董事长便会隔离其关键资产以防落入债权人或股东之手。

这有助于解释为什么在商业周期处于低点之时，此类事件反而屡有发生。尽管难以精确量化，与中国企业重组专家的对话却让我们发现了问题正在恶化的佐证。而且丑闻看来正在向规模更大且通常吸收了大量外资的公司蔓延。两种趋势相互关联。许多中国上市公司在金融危机之前曾得益于不断上涨的股市，通过成功地吸纳追逐中国增长利益的全球资本所提供的资金。它们重复发行股票，从境外银行获得贷款，而且许多曾发行过针对国际投资者的可转债。

对北京而言，这些丑闻来得不合时宜。由于世界其它地方的投资者预计中国经济将继续增长，聚焦于中国的资本市场的全球投资者的目光多于历史任何时期。企业作弊行为的增多还有损于北京在金融市场现代化方面的努力。中国政府已宣布了一个雄心勃勃的计划──在2020年之前把上海打造成全球金融中心。

问题的核心在于中国的破产程序，它没有提供具有连续性的途径以让债权人和小股东确保在公司治理失败的问题发生后，其剩余资产已得到保护，且他们的要求亦得到认可。应由哪个政府机构负责清理这个烂摊子通常并不明确。海外上市公司的管辖权问题比较复杂，因为内地的监管机构很少承认或执行外国破产管理机构的裁决。

以中华环保为例。这是一家在新加坡上市的污水处理公司。2009年3月，公司董事长兼首席执行长在一项以其股份做抵押的个人贷款上违约，这是该公司出现问题的第一个信号。随后普华永道公司(PricewaterhouseCoopers)在审计过程中发现这家公司在会计方面有不规范行为。因此公司的独立董事们向新加坡、香港和中国内地的警察机构提交了报告。

中华环保的首席执行长与其他两名执行董事最终辞职，但誓言将继续运营该公司在中国内地的业务。公司的独立董事在新加坡获得了法庭命令以阻止其出售公司资产。然而由于中国内地监管当局没有做出回应，几个月后他们仍在试图保护其中国子公司的资产和银行帐户。公司已任命一名扭亏转盈专家担任新的首席执行长并很可能会度过难关。但小股东们所经历的混乱局面显示当局缺乏有效的程序应对公司治理失败的问题。

公司治理的问题虽多，但还未达到会让国际投资者对中国公司财务报告的真实性提出系统性质疑的水平。然而这一趋势必须坚决予以制止，且毫无捷径可言──北京需要推进改革以实施可靠且具有连续性的破产程序。这一破产程序应适用于外国投资者，且能够在公司出现问题之时对内部人员将公司资产据为己有的能力加以限制。否则其风险是：投资者将开始反思中国的资本市场。

（编者按：J.C.•德斯万(J.C. de Swaan)是普林斯顿大学(Princeton University)经济系讲师。本文所述仅代表他的个人观点。）

Author J.C. de Swaan, source from WSJ