Gome's dramatics heat up
By Lydia Chen |
01:30 UTC+8 August 31, 2010
|
Print Edition
Print Edition
THE battle between Gome's jailed founder Huang Guangyu and its current board Chairman Chen Xiao grew tenser yesterday, when Huang's wife, who was convicted of insider trading, was released on probation, adding more uncertainty as to who will laugh at the end of the power fight.
Beijing Higher People's Court dismissed a 3 1/2-year sentence given to Du Juan, wife of Huang, who was once the richest person on Chinese mainland.
But the Beijing court upheld the 14-year sentence for Huang for illegal business dealings, insider trading and bribery.
Du was released right after yesterday's conviction, the court noting she had already paid off her fine of 200 million yuan (US$29.4 million) levied as part of her previous sentence delivered by Beijing No.2 Intermediate People's Court on May 19.
Heaviest fine
Huang will also have to pay a fine of 600 million yuan, according to the No. 2 People's Court ruling, and 200 million yuan of his personal assets will be seized. It's the heaviest fine issued against an individual in the history of the People's Republic of China since 1949, according to the Supreme People's Procuratorates.
The timing of the reduced sentence for Du, who used to be a board member of Gome, was widely considered of crucial help to her jailed husband because he needs someone on the outside to rebuild his clout in the riveting corporate soap opera enveloping the management of China's biggest home appliance retailer.
Du was in charge of all of Huang's investments in Hong Kong before she was busted and resigned her Gome board membership in December 2008.
Though according to Chinese law, she is not allowed to take any senior managerial position in Gome due to the probation, Du is quite likely to attend a special meeting of Gome's shareholders on September 28, a crunch point in the battle between Huang and Chen Xiao.
Escalating battle
The two sides have been in the escalated battle since early this month, when Huang demanded the board fire Chen and one of his allies and instead put two of Huang's men into the positions.
To woo more shareholders, the 41-year-old Huang, the biggest shareholder of Gome, released two statements over the weekend, saying there could be damages to the company if the board does not side with him to sack Chen.
The statement warned that Beijing Gome, another retail home appliance company owned by Huang, will call off any purchase deals or management cooperation compacts signed with the Hong Kong-listed Gome Electrical Appliances Holding in case the board ignores his voice.
In the second statement, Huang said he is willing to pay 5 percent higher for each share than the average price offered by other investors to grab 55 to 65 percent of the new shares planned to be issued by the board.
The board has authorized to issue up to 20 percent in new shares, which Huang said was a move by Chen to dilute Huang's grip on Gome.
In response, Gome's spokesman yesterday assured shareholders that Huang's threat was just a bluff and encouraged them to veto Huang's proposal.
Beijing Higher People's Court dismissed a 3 1/2-year sentence given to Du Juan, wife of Huang, who was once the richest person on Chinese mainland.
But the Beijing court upheld the 14-year sentence for Huang for illegal business dealings, insider trading and bribery.
Du was released right after yesterday's conviction, the court noting she had already paid off her fine of 200 million yuan (US$29.4 million) levied as part of her previous sentence delivered by Beijing No.2 Intermediate People's Court on May 19.
Heaviest fine
Huang will also have to pay a fine of 600 million yuan, according to the No. 2 People's Court ruling, and 200 million yuan of his personal assets will be seized. It's the heaviest fine issued against an individual in the history of the People's Republic of China since 1949, according to the Supreme People's Procuratorates.
The timing of the reduced sentence for Du, who used to be a board member of Gome, was widely considered of crucial help to her jailed husband because he needs someone on the outside to rebuild his clout in the riveting corporate soap opera enveloping the management of China's biggest home appliance retailer.
Du was in charge of all of Huang's investments in Hong Kong before she was busted and resigned her Gome board membership in December 2008.
Though according to Chinese law, she is not allowed to take any senior managerial position in Gome due to the probation, Du is quite likely to attend a special meeting of Gome's shareholders on September 28, a crunch point in the battle between Huang and Chen Xiao.
Escalating battle
The two sides have been in the escalated battle since early this month, when Huang demanded the board fire Chen and one of his allies and instead put two of Huang's men into the positions.
To woo more shareholders, the 41-year-old Huang, the biggest shareholder of Gome, released two statements over the weekend, saying there could be damages to the company if the board does not side with him to sack Chen.
The statement warned that Beijing Gome, another retail home appliance company owned by Huang, will call off any purchase deals or management cooperation compacts signed with the Hong Kong-listed Gome Electrical Appliances Holding in case the board ignores his voice.
In the second statement, Huang said he is willing to pay 5 percent higher for each share than the average price offered by other investors to grab 55 to 65 percent of the new shares planned to be issued by the board.
The board has authorized to issue up to 20 percent in new shares, which Huang said was a move by Chen to dilute Huang's grip on Gome.
In response, Gome's spokesman yesterday assured shareholders that Huang's threat was just a bluff and encouraged them to veto Huang's proposal.
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