Wu Ruilin, the controlling shareholder of Inner Mongolia-based Real Gold Mining, has resigned as a director following revelations by the South China Morning Post that he inappropriately pledged the listed company's mines to obtain personal loans.
While Wu, a telecoms-to-mining magnate who founded Real Gold, was never on the listed company's main board of directors, he was a director of one of its subsidiaries, Lita Investments.
The company said yesterday that Wu resigned from Lita on June 16 after its board discovered the asset pledges following inquiries by this newspaper. Wu no longer holds any position at the listed company.
Real Gold has insisted that none of its board directors, led by chairman Lu Tianjun, were aware of Wu's asset pledges until contacted by this newspaper about them on June 13. 'This incident highlights the serious corporate governance weakness of the company,' Macquarie analyst Calvin Chung wrote in a note to clients yesterday.
In October 2010, according to documents obtained from the Huizhou Administration of Industry and Commerce, Wu arranged a 240 million yuan (HK$288 million) borrowing facility with Shanghai Pudong Development Bank for four private companies that are part of his Cosun telecommunications-to-mining conglomerate. Wu signed a similar pledge with the bank for a 100 million yuan borrowing facility in September 2009, Real Gold announced yesterday.
In both instances, Wu handed Shanghai Pudong bank control of Fubon Industrial, a Real Gold subsidiary that owns all of its mines, in the event that his four private companies could not repay their borrowings.
