In August, Julong Pipe Industry (002619, full name Zhejiang Julong Pipe Industry Co., Ltd.), which is about to celebrate its first anniversary on the market, has ushered in a troubled year. In early August, Xu Weixing, a shareholder holding 6.708 million shares of the company and chairman of Zhejiang Zhengfang Holding Group, was taken away by the Zhejiang Provincial Commission for Discipline Inspection for investigation and has not returned yet.
On August 13, the company’s shareholder and supervisor Huang Xuelia was “under investigation by judicial authorities for suspected corruption and bribery crimes for personal reasons” and submitted his resignation to the company. On August 22, a year ago, the company's shareholder and vice president Zhu Zhusen was criminally detained by the local public security agency on suspicion of bribery and was later approved for arrest.
In just one year, three shareholders and two executives were investigated. The corporate governance of Julong Pipe Industry has aroused widespread criticism and doubts from investors. After Xu Weixing was controlled by the Discipline Inspection Commission, there were rumors that Lu Rengao, chairman of Julong Pipe Industry, had also "assisted in the investigation." However, Lu Rengao told a reporter from Time Weekly that he himself had not been investigated and "these are just rumors."
Two executives were investigated one after another
Julong Pipe Industry is a listed company in Wucheng District, Jinhua City. It is mainly engaged in concrete water pipelines, which are mainly used in municipal engineering projects. In this field, bribery to relevant functional department personnel in order to obtain projects is almost an unspoken rule in the industry, but it is rare for an executive of a listed company to be investigated one after another for this.
On September 20, 2011, just 9 days before Julong Pipe went public, the company announced that Zhu Zhusen, the company’s deputy general manager, was put on file for investigation by the judicial authorities “because of his personal suspicion of a crime” and submitted to the company Written resignation report.
Zhu Zhusen is a long-time subordinate of Lu Rengao, the chairman and actual controller of Julong Pipe Industry. Since 1985, he has served as technician and workshop director of Jinhua County Bailongqiao Dongyang Cement Products Factory (the predecessor of Julong Pipe Industry). , workshop director of Lanxi Shencun Cement Products Factory, assistant to the director of cement pipe factory, was hired as deputy general manager at the first meeting of the first board of directors of Julong Pipe Industry in August 2009, in charge of sales business.
On August 19, 2011, Zhu Zhusen applied for leave from the company on the grounds of poor health and was approved. He surrendered two days later and was criminally detained on August 22. He was transferred to arrest on September 5. 9 He was released on bail pending trial on March 9. But it was not until September 20 that Julong Pipe Industry made an announcement.
Zhu Zhusen was arrested at this point, which made Julong Pipe Industry CEO Lu Rengao break into a cold sweat. Under intensive media reports, Julong Pipe Industry’s listing almost failed. After a lot of hard work, Julong Pipe Industry was successfully listed on the Shenzhen Small and Medium-sized Board on September 29, 2011.
In the announcement, Julong Pipe attributed Zhu Zhusen’s bribery to “personal behavior and has nothing to do with the company.” However, a senior executive of Julong Pipe Industry told reporters that in Julong Pipe Industry, sales staff mainly receive compensation in the form of commission. Salespeople know very well how much commission they can get for taking an order. In order to successfully obtain the order, many salespeople will choose to bribe customers with a certain percentage of the commission. This seems to be a personal behavior, but it is actually for the company's business.
It is worth noting that Zhu Zhusen’s brother Zhu Zhugen is also an executive of Julong Pipe Industry, serving as director and deputy general manager. Zhu Zhugen had previously served as the workshop director of Lanxi Shencun Cement Products Factory, the workshop director of cement pipe factory, and the workshop director of Julong Pipe Industry. He also had a relationship with Lu Rengao for decades.
Both the Zhu brothers are the founders of Julong Pipe Industry. Before the issuance, Zhu Zhugen held 550,000 shares of Julong Pipe Industry and Zhu Zhusen held 250,000 shares, totaling 1.14% of the shares of Julong Pipe Industry. According to a Times Weekly reporter, after Zhu Zhusen was released on bail pending trial, the procuratorate ultimately did not prosecute him, but Zhu also did not return to work at Julong Pipe Industry. His brother Zhu Zhugen continues to serve as director and vice president of Julong Pipe Industry.
The controversy surrounding Zhu Zhusen’s bribery arrest had just calmed down. On August 13, 2012, Julong Pipe Industry issued another announcement, stating that the company’s Board of Supervisors received a written resignation report submitted by Huang Xuelia on that day. Huang Xuelia “due to He was investigated by judicial authorities for suspected corruption and bribery due to personal reasons." He requested to resign as a supervisor of the company's first board of supervisors and also resigned as a candidate for supervisor of the second board of supervisors. Huang Xuelia is also a direct descendant of Lu Rangao. He once served as a salesperson at Jinhua County Bailongqiao Dongyang Cement Products Factory, a salesperson at a cement pipe factory, the chief of the Jinhua Julong Market Information Section, and the deputy manager of the marketing department of Julong Co., Ltd. Before being arrested, he served as a supervisor and marketing manager of Julong Pipe Industry, and held 500,000 shares of Julong Pipe Industry before the issuance.
Same wording as the Zhu Zhusen case, Julong Management stated: Huang Xuelia is suspected of bribery, which is his personal behavior and has nothing to do with the company. However, people in the industry understand that the company's two senior executives in charge of sales have been arrested in connection with the case, which will inevitably have a great impact on the sales business of Julong Pipe Industry.
Shareholders with a market value of over 100 million were investigated by the Discipline Inspection Commission
Because they successfully defined bribery as personal behavior, Zhu Zhusen and Huang Xuelia were investigated one after another. On the surface, they did not cause any harm to Julong Pipe Industry. substantial impact.
However, in early August this year, the investigation of company shareholder Xu Weixing caused a huge shock wave in Jinhua’s political circles. Lu Rengao, chairman of Julong Pipe Industry, also received many calls asking whether he had been "under investigation."
“We have been paying attention to this matter, but there is currently no information that can be disclosed.” On September 11, Zheng Liang, secretary of the board of directors of Julong Pipe Industry, told a reporter from Times Weekly. Xu Weixing is the chairman of Zhejiang Zhengfang Holding Group Co., Ltd.
The company was established in April 2005 and is located in Linjiang Industrial Zone, Wucheng New District, Jinhua City. It has a registered capital of 120 million yuan, of which the group trade union committee holds 49.08% of the shares, and there are 8 natural person shareholders, of which Xu Weixing holds 15.17% and Xie Guangyan holds 15.17%. Shi Limin holds 7.13% of the shares, and the other shareholders hold less than 5%. The company was formerly known as "Jinhua County Traffic Engineering Company" established in 1992, and was later restructured into Zhengfang Holdings.
Zhengfang Holdings has 7 companies, including Zhejiang Zhengfang Transportation Construction Co., Ltd. and Zhejiang Zhengfang Real Estate Co., Ltd. are wholly-owned holding companies, Zhejiang Zhongke Zhengfang Electronic Technology Co., Ltd., Zhejiang Zhengfang Technology Co., Ltd., Jinhua Five companies, including Tongda Traffic Engineering Supervision Co., Ltd., Jinhua Tongda Traffic Engineering Design Co., Ltd., and Zhejiang Zhengfang Pharmaceutical Co., Ltd., are holding or joint-stock companies.
Julong Pipe Industry and Zhengfang Holdings are both star companies in Wucheng District, Jinhua City. Lu Rengao and Xu Weixing have known each other for many years, and Julong Pipe Industry and Zhengfang Holdings also have many cooperative relationships. For example, in February 2008, Julong Pipe Industry signed a "Lease Contract" with Zhengfang Transportation, leasing the southeast corner of the factory area to Zhengfang Transportation for the purpose of stacking various types of rock, asphalt, etc. The lease term is 3 years, and the annual rent is is 170,000 yuan.
In 2009 and 2010, Julong Pipe sold various types of drainage pipes to Zhengfang Traffic for 370,000 yuan and 320,000 yuan respectively. From June 22, 2009 to July 1, 2009, Julong Pipe Industry borrowed 15 million yuan from Zhengfang Communications without paying any interest, which was used for Julong Pipe Industry's centralized repayment of bank loans.
In addition, Zhejiang Zhengfang Real Estate Co., Ltd. has also provided guarantees for Julong Pipe Industry’s bank loans.
Perhaps based on the long-term cooperative relationship, on the eve of the listing of Julong Pipe Industry, Lu Rengao transferred a large number of original shares to Xu Weixing at a price of 2 yuan per share.
On April 17, 2009, Julong Holdings, a shareholder of Julong Pipe Industry, transferred 1.6 million shares of its limited equity in Julong to Xu Weixing.
Four days later, on April 21, Julong Co., Ltd. added a registered capital of 10.07 million yuan, and 13 domestic natural persons, including Xu Weixing, Huang Xuelia, and Zhu Zhusen, contributed monetary funds. Xu Weixing's shareholding reached 5.16 million shares, making him the shareholder who actually holds the largest number of shares in Julong Pipe Industry besides Lu Rengao and Lu Chengjie.