Dongguan Securities IPO Scuppered by Bribery Allegations


The IPO of Dongguan Securities has run aground on bribery allegations involving the former vice-governor of Guangdong province.

Established in 1988 with registered capital of 1.5 billion yuan, Dongguan Securities was one of the first underwriting firms launched in China.

Guangdong Golden Dragon is currently the company’s single largest shareholder with a 40% stake in Dongguan Securitieswhile Dongguan Guoziwei indirectly holds a 55.4% via three of its subsidiaries, and is the company’s actual controller.

According an official media statement made by Guangdong Golden Dragon, the veteran securities firm’s long-awaited IPO has been suspended following allegations that Guangdong Golden’s actual controller Yang Zhimao bribed Liu Zhigeng, the vice-governor of Guangdong province.

Both Liu Zhigeng and Yang Zhimao were placed in custody by China’s central disciplinary commission in February last year, while Guangdong Golden Dragon’s shares were suspended by trading for over a month.

The Guangxi Nanning Railway Intermediate Court opened its trial of Liu Zhigeng on 24 February 2017, with prosecutors accusing him of receiving a total of 98.17 million yuan in bribes, in exchange for assistance with bank loans, equity purchases and land disposals.

Liu pleaded guilty to the charges, while Yang Zhimao’s name appeared in news coverage of the trial.

While there is currently no public information on the precise nature of their relationship, sources close to the matter said to Caixin that Yang Zhimao had provided bribes of unknown sums to Liu Zhigeng in relation to equity purchases.

The career trajectories and locations of both men would imply an association between them, with both having extensive ties to the cities of Dongguan and Qingyuan in Guangdong province.

Prior to becoming vice-governor of Guangdong province, Liu served as vice-party secretary and mayor of Qingyuan during the period from 2002 to 2004, before being appointed to the positions of vice-party secretary, party secretary and mayor in Dongguan during a seven year stint in the city.

54 year-old Yang is himself a native of Dongguan, while Guangdong Golden Dragon also happens to be the sole listed company in the city of Qingyuan.