Hikvision’s shares fell by the most in more than a month after China’s securities regulator opened a probe into alleged misconduct by its billionaire vice chairman.
The investigation, announced in a filing on Wednesday, deals another blow to the surveillance giant that’s blacklisted by Washington. The Chinese seller of video cameras said the China Securities Regulatory Commission is probing two of its board members — Gong Hongjia and Hu Yangzhong — adding that the pair are cooperating with authorities.
Hikvision is fighting for its survival after the US banned the company in October, accusing it of helping Beijing crack down on Muslim minorities in the far-western region of Xinjiang. The sanction cut Hikvision off from American chipsets needed for its surveillance cameras. The company denies any wrongdoing. Hikvision’s shares fell as much as 4.5% on Thursday morning, the biggest decline since 10 October.
Vice chairman Gong’s fortune peaked in November 2017 at US$13-billion but escalating trade tensions between Washington and Beijing have since taken a toll. It’s now worth $6.9-billion as of Wednesday’s market close in China, excluding about 41% of his stake in Hikvision that’s been pledged as collateral, according to the Bloomberg Billionaires Index. That’s still up 21.6% since the beginning of this year, mainly tracking the movement of Hikvision shares.
Gong was born in eastern China’s Zhejiang province in 1965 and holds a computer science degree from Huazhong University of Science and Technology. He later moved to Hong Kong, where he founded his first company, electronics maker Tecsun Radio, according to a report by HSBC on Chinese tycoons. He earned the moniker “China’s best angel investor”, creating or investing in more than a dozen companies, the report said. He took up his current position at Hikvision in 2008 and holds a 13.4% stake, making him the company’s largest individual shareholder.
Hu is president of Hikvision and holds a stake of just under 2%.
The probe centres on alleged misconduct by the men related to the disclosure of information, according to the Hikvision filing. A person familiar with the matter said the issue arose from a bonus plan for employees that hadn’t been declared. The investigation is into the executives rather than the company, the person said, asking not to be identified discussing an ongoing case.
A Hikvision representative declined to comment beyond the statement.
Hikvision warned last month it may lose customers in overseas markets because of the US blacklisting, underscoring the extent to which curbs on the sale of American technology may hurt the world’s largest video surveillance business. The company said it had anticipated the action and stockpiled enough key parts to keep operations going for some time. It has also said it didn’t foresee major impact on its business as a result of the ban. — Reported with assistance from Venus Feng, (c) 2019 Bloomberg LP