Firm鈥檚 ex-CEO, bank staff in probe to divert funds
Print Edition
NVC Lighting Holding Ltd, China’s biggest lighting manufacturer, said its former Chief Executive Wu Changjiang and employees of four leading Chinese banks are under police investigation for allegedly helping divert company funds.
NVC suspects Wu of either embezzling or falsely obtaining loan guarantees totaling 623 million yuan (US$102 million) without the knowledge of the company’s current board.
The transactions were arranged by the Bank of China, China Minsheng Banking Corp, China Construction Bank and the Industrial and Commercial Bank of China, NVC executives said.
“This is a huge international scandal,” NVC’s Chief Executive Wang Donglei, who took charge of the company after expelling Wu in August, said on a conference call yesterday. “These banks misled the company and investors with false information.”
The probe casts greater uncertainty over the future of the lighting manufacturer. NVC, whose shareholders include private equity firm SAIF Partners and French electrical systems supplier Schneider Electric SE, has lost about 60 percent in market value since its peak in November 2010. The company’s stock in Hong Kong has been suspended since August 11.
Wang said the diversion of funds had halted plans to merge the LED unit of Elec-Tech International Co into NVC. Elec-Tech, controlled by Wang, is NVC’s top shareholder.
It is unfair to other shareholders if the merger took place now, he said.
NVC founder and former Chief Executive Wu was expelled from the company in August, following accusations that he secretly signed licensing agreements on behalf of a company subsidiary.
NVC said earlier this month that company funds totaling 448 million yuan had been withdrawn from three unnamed banks without board notification.
An estimated 230 million yuan was withdrawn from one of the banks at the end of August, after Wu signed three pledge agreements on behalf of NVC China, the firm said in a filing with the Hong Kong stock exchange on November 6.
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