Zong Qinghou

Beverage king blames partner

PUBLISHED : Wednesday, 16 April, 2008, 12:00am
UPDATED : Wednesday, 16 April, 2008, 12:00am


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The chairman and founder of Wahaha - the mainland's largest drinks maker - has accused the company's estranged French joint venture partner, Group Danone, of tipping off mainland tax officials in his massive tax-evasion case.

Zong Qinghou, who is being probed by tax authorities over a tax bill of almost 300 million yuan (HK$334.4 million), admitted to the evasion, but insisted he paid more than 200 million of that in October before the investigation opened, the Daily Economic News reported.

'I know Danone had a hand in it,' Mr Zong was quoted as saying, naming Qin Peng , the French firm's greater China area chief executive.

Tax authorities began investigating Mr Zong in November after receiving a tip-off from someone calling himself a 'taxation enthusiast', the latest issue of the business magazine Caijing reported.

They were still trying to determine whether the last-minute payments had put Mr Zong's outstanding tax bill under the threshold for criminal prosecution, the magazine said.

Danone paid Mr Zong US$71 million in service fees, share repurchases and dividends from incentive shares between 1996 - when Danone established a joint venture with Wahaha - and 2006.

At Mr Zong's request, the money had been deposited in various bank accounts, including that of his wife, Shi Youzhen , daughter Zong Fuli and the former party head of the Wahaha Group, Du Jianying .

Wahaha, based in Hangzhou , is locked in a bitter ownership dispute with Danone over the Wahaha brand name. Mr Zong had ruled out any possibility of reaching an agreement, the Daily Economic News said.

His comments came after Danone's managing director, Emmanuel Faber, voiced 'optimism' that its differences with Wahaha could still be resolved, even though no progress had been made by the April 10 deadline.

Danone and Wahaha agreed in December to suspend a legal battle over the Wahaha trademark, and to work out their differences.

Danone says it is willing to sell its stake if the two parties can agree on the financial terms.