SHANGHAI/BEIJING (Reuters) – China’s securities regulator is investigating one of the country’s richest men for alleged violation of disclosure rules as a director of U.S.-blacklisted surveillance camera giant Hikvision (002415.SZ), the company said.
FILE PHOTO: Surveillance cameras are seen near the headquarters of Chinese video surveillance firm Hikvision in Hangzhou, Zhejiang province, China May 22, 2019. REUTERS/Stringer/File Photo
Directors Gong Hongjia and Hu Yangzhong had been named as suspects and would cooperate with the investigation by the China Securities Regulatory Commission (CSRC), the firm said in a filing to the stock exchange on Wednesday. It did not provide any detail of the alleged violations.
Gong is a Hikvision vice chairman and the firm’s largest individual shareholder with a 13.4% stake, according to Refinitiv data. The Forbes China rich list puts his net worth at $9 billion, making him the 26th-richest person in the country.
Hu is general manager of Hikvision, the world’s biggest supplier of video surveillance systems, and is ranked by Forbes as the 265th wealthiest person in China with a net worth of $1.5 billion.
Reuters was not immediately able to reach the two directors, whose whereabouts are unknown.
Hikvision shares fell as much as 4.5% on Thursday while the broader market .SSEC was up 0.3%.
Two sources familiar with the matter said the allegation pertained to how some details of an employee bonus plan not been declared.
The investigation concerned the “mentioned board member individuals” and not the company, a Hikvision spokeswoman said. She declined to comment on whether it was related to a bonus plan.
“Hikvision performs information disclosure obligations strictly in accordance with regulatory requirements,” the spokeswoman said.
The commission did not immediately respond to a request for comment.
Hikvision was one of eight firms added to a U.S. blacklist in October aimed at punishing Beijing for its treatment of Muslim minorities in the north-western region of Xinjiang.
The firm allegedly provided equipment to police throughout Xinjiang, where China has been accused by Washington of repression, arbitrary detention and mass surveillance of the Muslim minority.
Andrew Davenport, chief operating officer of Washington-based risk consultancy RWR Advisory, said he did not think the investigation would immediately worsen perceptions of the firm in the United States given Washington was mainly concerned about data and cyber security.
“I don’t think the possible financial misdeeds of leadership are seen as the real problem the company is carrying around with it,” he said, adding however that so far little was known about the allegations.
“We’re used to seeing Chinese officials crack down on the leadership figures of Chinese companies for various political and other reasons.”
In May, the CSRC said it was working to improve the quality of China’s listed firms after a series of disclosures stoked investor concerns over poor governance.
Reporting by David Stanway and Cate Cadell; Additional reporting by Brenda Goh in Shanghai and Yingzhi Yang in Beijing; Editing by Stephen Coates