(Economic Observation) Ruixing Coffee's senior management "big blood exchange" management crisis attracts attention

  China News Agency, Beijing, May 13 (Reporter Chen Kangliang) Ruixing Coffee's financial fraud incident has recently fermented again, and the company's management has undergone tremendous changes.

  On the evening of the 12th, Ruixing Coffee issued an announcement that the board of directors had terminated the positions of chief executive officer and chief operating officer of Qian Zhiya and Liu Jian, respectively. In addition to the above-mentioned two, since the internal investigation began, Ruixing Coffee has suspended or suspended 6 other employees who participated in or learned of the fabricated transaction. The board of directors appointed senior vice president Guo Jinyi as acting chief executive officer, and appointed Cao Wenbao and Wu Gang as directors.

  That evening, Ruixing Coffee ’s president ’s office issued an internal letter stating that the investigation is still ongoing and the company will continue to cooperate fully with the investigation. Under the leadership of the board of directors, the new management will also reorganize the company's organizational structure as soon as possible, reshape the company's value culture, strengthen internal control to ensure legal compliance, and make every effort to maintain operating stability.

  At the beginning of April, Ruixing Coffee issued an announcement that exposed financial fraud of 2.2 billion yuan, shaking the US and China capital markets. The initiator of the suspected financial fraud is Liu Jian, who has been suspended.

  According to public information, Liu Jian has been the chief operating officer of Ruixing Coffee since May 2018. Like most of Ruixing ’s executives, Liu Jian was also a member of Ruixing Coffee ’s founder Qian Zhiya in the China Automobile team.

  Ruixing Coffee's turmoil caused by the alleged fraud of senior executives is attracting more and more attention. Among them, one of the concerns is how listed companies can prevent management crises caused by executive errors. Many Chinese listed companies have turned their attention to insurance products.

  According to media statistics, since this year, 72 A-share companies have announced that they will purchase directors' liability insurance. Among them, in the month of April alone, 58 companies plan to insure, which is higher than last year.

  The so-called director's liability insurance, that is, the liability insurance of directors, supervisors and senior management personnel, refers to when the company's "director of directors and supervisors" in the process of exercising their powers and duties, due to faults, resulting in third parties suffering economic losses and should bear the risk of economic compensation liability, The use of this insurance product can transfer the risk to the insurance company, and the insurance company shall bear the financial compensation liability according to the contract.

  Zhou Yifang, head of the financial insurance department of Anda Insurance China, pointed out that the financial fraud incident of Ruixing Coffee is one of the important reasons for the insurance of directors and insurance. After Ruixing Coffee's financial fraud, its company received a large number of inquiries from directors and insurance companies every day. This shows that this type of insurance has attracted great attention in A-share listed companies.

  According to public information, Ruixing Coffee purchased the director's liability insurance before going public in the United States. Its total policy insured amounted to 25 million US dollars, involving many insurance companies such as China Ping An.

  However, some analysts reminded that Dong Ligong may "can't save" Ruixing Coffee. Zhu Junsheng, deputy director of the Insurance Research Office of the Development Research Center of the State Council, said that directors ’liability insurance usually covers investors’ losses caused by false statements and major omissions caused by negligence, but if it is intentional, it is generally a responsibility to exempt the project, and the insurance company does not need to pay. , So it also depends on how the event of Ruixing will be qualitative.

  Zhao Xijun, deputy dean of the School of Finance and Economics of Renmin University of China, also told reporters from China News Service that Dong's liability insurance is a tool for risk transfer, but it is by no means a "protection umbrella" for malicious fraud or crime. In addition to listed companies being good at using insurance products such as directors' liability insurance to avoid risks, it is more important to practice internal skills and operate with integrity. (Finish)