Public airing for China Gas' boardroom tiff
A boardroom tussle at China Gas Holdings has spilled into the open, with ousted directors stepping up their efforts to be reinstated.
Li Xiaoyun and Xu Ying, who were sacked as chairman and vice-chairman, respectively, at a board meeting on March 3, are now lobbying shareholders to vote down a motion to remove them at a special shareholder meeting on April 26. The company supplies piped gas to 123 mainland cities.
Li and Xu said they were shocked to be notified that their employment contracts had suddenly been terminated, putting an abrupt end to their 10-year stints with the company as representatives of a substantial shareholder - Hai Xia Economy and Technology Co-operation Centre, an organisation under the Taiwan Affairs Office of the State Council.
Sources within the Li and Xu camp said the pair planned 'in the next few days' to disclose what they called further grounds for their reinstatement.
Last week Hai Xia paid for a full-page notice defending the two men and criticising the board for poor corporate governance, a charge China Gas denies.
The notice said: 'The [removal of Li and Xu] was primarily pushed by subordinates of Liu Minghui, and these people failed in their duty to act in the best interests of the company's shareholders. The dismissals were totally unreasonable, disgraceful and unfair to Li and Xu.'
Liu is China Gas' former managing director, who was arrested on December 17 by Shenzhen police for allegedly embezzling corporate assets, and has since been detained. China Gas sacked him in January.
The firings of Li and Xu brought Liu's case back into the limelight. The company's executive president at the time, Huang Yong, was also arrested and detained in Shenzhen, and company executives have since been unable to contact the men.
China Gas said Li and Xu were sacked because they failed to perform their duties when they concealed the arrests of Liu and Huang at a board meeting on December 23, a claim that Hai Xia rejects.
A source at China Gas also faulted the two men for not going to the office every day: 'They should ask themselves if it is for or against shareholders' interest to be paid more than HK$10 million a year but to not come to work every day.'
Hai Xia has reduced its stake in China Gas from 6.75 per cent to 4.21 per cent over the past year.
According to China Gas' latest annual report, Li pocketed HK$3.13 million in director's fees and payments in the year ended March last year, and Xu was paid HK$9.87 million in salary and bonuses.
Hai Xia called Li and Xu the architects of China Gas' success. It said the company, which has a market capitalisation of HK$15 billion, had won 'dozens of contracts' because the two men had helped it build ties with local governments.
A showdown between China Gas management and Hai Xia now looms in the lead-up to the April 26 shareholders' meeting in Hong Kong.
The Li-Xu camp is lobbying support from China Gas' strategic shareholders including China Petroleum and Chemical Corp, or Sinopec, with a 9.92 per cent stake, according to a different source at Hai Xia.
China Gas is seeking support from other shareholders, such as Gail of India, which has an 8.55 per cent stake; Oman Oil of Oman with a 7.66 per cent interest; and SK Gas of South Korea, with a 5.22 per cent shareholding.
China Gas shares fell one HK cent to HK$3.41 on Friday, from a low of HK$2.70 in February.