FOUNDER Securities Co., a joint venture partner of Swiss bank Credit Suisse AG, has appointed an interim chairman because it lost contact with incumbent Lei Jie after he applied for sick leave.

    Lei asked for a week’s sick leave Jan. 12 and the firm hasn’t been able to reach him since Jan. 19, Shanghai-listed Founder Securities said in a statement Friday.

    “The company is unable to reach Lei Jie and that is expected to cause a certain degree of impact to the company’s internal operations,” Founder Securities said.

    President He Qicong will act as chairman until Lei resumes his duties or the board decides whether to pick a replacement, the brokerage said in the statement.

    The firm, China’s sixth-largest listed brokerage, and parent Peking University Founder Group are embroiled in disputes with billionaire Miles Kwok’s Beijing Zenith Holdings Co., the brokerage’s second-largest shareholder. In a public trading of accusations since late last year, Founder denied Zenith claims ranging from insider trading to misappropriating State assets.

    “This is a headache for Credit Suisse — it’s a problem that nobody could have expected,” said Linus Yip, a strategist at First Shanghai Securities Ltd. “One of the major risks for foreign firms in joint ventures in China is suddenly discovering some problem with the partner that is beyond their imagination.”

    In December, Zenith obtained a court order freezing some Founder Securities bank accounts. This month, Founder Group executives were questioned by authorities and its chairman stepped down, according to statements by its units, which didn’t give more details.

    The Swiss lender owns a third of Credit Suisse Founder Securities Ltd., which was set up in 2008 and competes with similar partnerships between Chinese firms and global banks including UBS Group AG, Goldman Sachs Group Inc. and JP Morgan Chase & Co. Foreign banks are allowed to underwrite stocks and bonds in China only through joint ventures with local firms.

    The relationship between Founder Group and Zenith soured after a deal in 2013 that saw Founder Securities combine with China Minzu Securities Co., a private brokerage owned by Zenith.

    Shares of Founder Securities, which is based in Hunan Province’s Changsha, have declined about 17 percent since Dec. 8, when Zenith said it had made a report to authorities accusing Founder Group management of wrongdoing. Even so, Founder Securities has more than doubled in the past six months because of China’s stock market boom.

    Founder Securities said Thursday that it expected net profit in 2014 to rise 50-100 percent from 1.1 billion yuan (US$177.18 million) the previous year, as its core financial business expands.

    Global firms have struggled to make inroads into China’s stock underwriting market, which was dominated last year by domestic players, with neither the Credit Suisse nor the Goldman Sachs joint ventures advising on any initial public offerings.

    In 2014, the Credit Suisse joint venture ranked 17th among advisers for equity, equity-linked and rights sales. Still, it was the best ranking among global investment banks.

    In June 2008, Kai Nargolwala, then chief executive officer of Credit Suisse Asia Pacific, said the joint venture was “a very important milestone in the implementation of Credit Suisse’s ambitious Asia-Pacific growth strategy, particularly for a vitally important country like China.”

    In November 2013, Founder Securities said it would offer to pull out of the venture because of its planned tie-up with Minzu, the deal that led to the disputes between Founder and Zenith. (SD-Agencies)