Wahaha cries foul over KPMG newspaper advert

PUBLISHED : Thursday, 02 July, 2009, 12:00am
UPDATED : Thursday, 02 July, 2009, 12:00am

A spin-off from the protracted dispute between French food giant Groupe Danone and its estranged partner, Hangzhou Wahaha Group, sees the mainland firm involved in a heated legal battle with auditing firm KPMG.

Wahaha sued KPMG in two mainland courts last year over asset-freezing actions taken by the auditing firm after being appointed a receiver by overseas courts - in the British Virgin Islands and Samoa - in 2007 as a result of writs taken out by Danone.

Last week, KPMG issued an apology to Wahaha in a newspaper advertisement after the mainland courts ruled against the asset-freezing orders and upheld the decisions following appeals by the auditing firm.

However, on another page in the same newspaper, KPMG announced that it would 'seek grievance' - the format for a final appeal under mainland civil law in this case. KPMG said it fully respected the judgment of the two mainland courts and made the public apology to the three Wahaha firms involved. Meanwhile, it insisted it had the legal right to file a grievance with the Supreme People's Court.

Wahaha condemned the move. 'KPMG's trick of making an apology and at the same time a public declaration of seeking grievance ... is a provocation of China's judiciary system,' it said.

Wahaha's strongly worded statement reignited memories of the public spat between the mainland beverage firm and the French food giant.

Observers believe it is a prelude to another public relations war as the key judgment in the Danone case - an arbitration in Stockholm to resolve the contractual disputes - is expected this month. KPMG declined to comment on Wahaha's statement as legal procedures are under way. A Danone spokesman declined to comment on the lawsuit, but stressed that KPMG was appointed by the overseas courts and needed to report to them, not Danone.

The receivership and asset-freezing orders were suspended by the British Virgin Islands court last year, pending the outcome of appeals by Danone.

Since the disputes began in April 2007, Danone has sued Wahaha and chairman Zong Qinghou (left) in courts around the world including the British Virgin Islands and California.

Wahaha, on the other hand, has filed cases in mainland courts. So far, the firm has won all the lawsuits on the mainland.

Danone accused Wahaha of setting up 77 parallel operations outside their 39 joint ventures to sell Wahaha-branded products such as soft drinks and bottled water.