Gao’s dead end strategy

Nearly 20 years have passed since the drowning at sea of British media tycoon Robert Maxwell. His death remains one of the more enduring mysteries in recent business history. Did he commit suicide over his company’s massive debts? Was he assassinated by Soviet (or even Israeli) agents? Or did he topple overboard after a glass of champagne too many? Despite an official ruling of accidental drowning, the controversy is unresolved.

Gao Qingchang lacked Maxwell’s public profile but his apparent suicide last month has similarly captivated the Chinese press. Just three days after listing his modest chemicals business Wanchang Technology in Shenzhen, the 68 year-old fell to his death from his 23rd floor apartment.

Officials said Gao had been depressed and that it was a simple case of suicide. But news outlets are convinced there’s more to the story.

Why else might Gao have plunged to his death? Recent months have seen a raft of reports about the financial misdealing of Chinese firms listed on overseas bourses, but China’s own stock markets can be even more opaque. And in the days that followed, it turned out that Wanchang Technology’s IPO was mired in controversy too.

For instance, it seems that Gao was also chairman and shareholder of another Shandong firm, machinery-maker Wanchang Holdings. Its investors had accused him of transferring assets to the company that ended up being listed. One told reporters that he had threatened to derail the IPO if Gao didn’t come clean. (Gao allegedly offered him Rmb10 million not to make a fuss).

So, we have plot subtext one: that Gao had plenty of enemies. Maybe one of them pushed him off the 23rd floor?

Reporters appeared to corroborate the claims that Wanchang Holdings had been asset-stripped. “[Although] the company’s assets of Rmb300 million are clearly visible on the books,” writes Southern Weekly, “in reality they have already disappeared, and the business can’t even be found at its listed address.”

Gao had tried twice before to get Wanchang Holdings to IPO and failed both times (reportedly because of allegations of financial wrongdoing). It is alleged that he then misappropriated assets to start the entirely separate chemicals business. It also turns out that Wanchang Holdings, which made parts for oil refineries, had a subsidiary making chemicals for the industry – the same chemicals that Wanchang Technology now sells.

Which gives us plot subtext two: Gao’s subterfuge was about to be revealed, and he jumped to avoid the humiliation. But according to Caijing magazine, the leading rumour is that some of Gao’s 40% stake in Wanchang Technology was really being held for a third party (the theory is that he wouldn’t have been able to list the firm at third attempt without the help of someone powerful). Rather than pass over the ownership stake to his backer, Gao opted to kill himself so that those shares would legally pass to his son.

Subtext three: that Gao jumped to have the last laugh on the shadowy figure with a claim on his business (no wonder the netizens like this theory most, given their often jaundiced view of people in positions of wealth and power).

Just like the death of Robert Maxwell, many questions are still unanswered. Why did the local Financial Affairs Office announce the suicide verdict (instead of the police)? Why didn’t stock market regulators agree to investigate the claims against Gao until after he was dead? And why was he finally able to list Wanchang after the two previous failures?

One group that will be particularly concerned about getting answers is Wanchang Technology shareholders. The share price fell 26% in the days after his death. Despite the appointment of a replacement, the stock price is yet to recover.

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