China Gas row heats up over 'bogus' premise
A board row at China Gas Holdings escalated yesterday, with a major shareholder calling the reasoning behind plans to dismiss the chairman and vice-chairman as flawed while urging the firm's auditor and regulators to look into a potential conflict of interest of a joint managing director.
In a statement, founding shareholder Hai Xia Finance Holdings said grounds for the board's plan to oust chairman Li Xiaoyun and vice-chairman Xu Ying were 'bogus'.
The board said in a shareholders' circular 'certain members of the board' believed that Li and Xu did not 'completely disclose' their knowledge of former managing director Liu Minghui's detention by Shenzhen police in December. Shareholders will vote on the proposal on Tuesday next week.
The board meeting, which approved the plan to oust the two directors, took the form of a teleconference and the dismissal motion was 'suddenly raised' by directors friendly to Liu, Hai Xia said. Liu is being investigated for allegedly embezzling corporate assets and was sacked by China Gas in January.
Liu has a 13.4 per cent stake in China Gas, followed by China Petroleum & Chemical's (Sinopec) 9.9 per cent, Gail (India)'s 8.6 per cent, Oman Oil's 7.7 per cent and SK Holdings' 5.2 per cent, according to stock exchange data. Hai Xia cut its stake to 4.2 per cent from 6.8 per cent in the past year.
Hai Xia said six other China Gas directors besides Li and Xu knew of Liu's detention in Shenzhen on December 17 and 18, so Li and Xu should not be singled out for non-disclosure.
China Gas said last night that Li and Xu had not provided full details to the board of the allegations against Liu. Other directors only received the details much later from Shenzhen police, a person in Liu's camp said.
China Gas said in the circular that shareholders can view on request third-party documents purportedly showing that Li and Xu knew of the detention but did not make it public.
Hai Xia, meanwhile, has urged regulators and China Gas auditor Deloitte Touche Tohmatsu to investigate potential conflicts of interest related to the undisclosed connected dealings of joint managing director Pang Yingxue, who is in Liu's camp.
A Hai Xia spokesman said four firms controlled or invested by Pang - Cangzhou Jiecheng Pipeline Anti-corrosion, Shenzhen Maoyi Industry Development, Shenzhen Jiecheng Haodi Technology, Shenzhen Jiuan Gas Equipment - supply China Gas. China Gas is investigating. Its foreign strategic investors could not be reached. Pang denied the claim. Hong Kong Exchanges & Clearing and Sinopec declined to comment.
Founding China Gas shareholder Hai Xia Finance Holdings cut its stake over the past year from 6.8 per cent to this size: 4.2%