(Updates with comment from analyst in third paragraph.)
Jan. 13 (Bloomberg) -- Sinopharm Group Co., China’s biggest drug distributor, said a former vice president has been detained by Shanghai authorities as part of a probe into a corruption allegation against the executive. The stock fell.
Shi Jinming, a former vice president, was detained Jan. 10 and Xu Yizhong, previously general manager of a Sinopharm distribution unit, is also involved in the investigation, the company said yesterday. A whistle-blower accused the two of misappropriating company funds and setting up illegal personal accounts, Yicai.com, the website of China Business News, said today, citing unidentified sources close to the company.
“Illegal moving of funds is quite common among state-owned enterprises as they lack monitoring of senior executives,” said Johnson Sun, a health-care analyst at Guotai Junan Securities Hong Kong Ltd. “It’s actually good for something like this to be exposed at Sinopharm as it will benefit shareholders.”
China is expanding a crackdown on corruption in the health- care industry that began in July and has led to the arrest of some executives at GlaxoSmithKline Plc and probes into doctors and medical workers. Last month, the country’s National Health and Family Planning Commission announced a blacklist of drug companies found to have been engaged in commercial bribery.
Sinopharm closed 1.1 percent lower at HK$22.75 in Hong Kong trading, after falling as much as 3.7 percent. The city’s Hang Seng Index gained 0.2 percent.
Yang Liu, a media officer for Shanghai-based Sinopharm, didn’t answer her office line or mobile phone and didn’t immediately respond to an e-mailed query about the investigation.
China National Pharmaceutical Group Corp., the parent of Sinopharm, is directly controlled by the State Council’s State- owned Assets Supervision and Administration Commission.
Shi gave up his position on Jan. 7 after handing in his resignation letter in December due to personal reasons, Sinopharm said. He was detained by the People’s Procuratorate of Shanghai Pudong New District.
--Daryl Loo. Editors: Anjali Cordeiro, Lena Lee