Between them they’ve lost billions, and yet senior management at China’s top two lines have decided to reward themselves with massive pay increases, Splash can reveal, in the latest embarrassing setback to hit gaff prone Cosco and China Shipping.
Cosco Holdings and China Shipping Container Lines (CSCL), two of the listed subsidiaries of China Cosco Shipping Corporation (Coscocs), the new shipping conglomerate made up of Cosco Group and China Shipping Group, have substantially increased the salaries of their management, despite suffering huge losses, financial reports show.
Cosco Holdings reported a net loss of RMB4.48bn ($683m) for the first quarter of 2016, while CSCL suffered a net loss of RMB859m ($131m) in the same period, following a net loss of RMB2.95bn ($450m) in 2015.
According to the two companies’ financial reports, the total management salary of Cosco Holdings and CSCL have increased by 47% and 88% respectively in the year of 2015, compared with the year before.
Cosco Group and China Shipping Group started a merger in 2015 and have since been streamlining its operations. By the end of 2015, Cosco Group had downsized its employee numbers to 28,000, from nearly 40,000 at the end of 2013.
The companies have been through a series of embarrassing setbacks in recent years, with gross corruption unearthed and aired in a very public manner.
Last October the minutes of a closed-door meeting were reported by Beijing Daily’s official Wechat account and reproduced by news outlets at the weekend before being deleted.
Xu Aisheng, Cosco’s newly appointed discipline inspection head, was quoted detailing the huge charters Cosco had paid out and other investment errors, and how the company had possibly been involved in illegal activities.
Golfing and unnecessary travel by company bosses, irregular hiring and delayed retirement were some of the key issues Xu detailed.
Cosco has long been viewed sceptically, especially by investors in Hong Kong. One of the company’s arch-critics, Charles De Trenck, an analyst and occasional Splash contributor, wrote last year on Cosco: “When a company has a group of people who jockey their way to the top and then get handed the purse strings of a behemoth with hidden nooks to hide things, seemingly bottomless pits to continue reorganising, free money from governments, it is easier to pretend to be competent. Until the music really stops.”