Gome sues ex-chairman over 'false' comments

PUBLISHED : Wednesday, 22 June, 2011, 12:00am
UPDATED : Friday, 08 May, 2015, 9:12am


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Three months after he resigned from the company, the once cordial relationship between Gome Electrical Appliances and its former chairman Chen Xiao has soured.

The mainland's second-biggest home appliance retailer yesterday said that it had filed a lawsuit in the Beijing Intermediate People's Court, accusing Chen of making 'false and misleading company information to a financial newspaper', inflicting financial damage on the company.

Chen was quoted by the Guangzhou-based 21st Century Business Herald on May 10 as saying there were 'grey areas' in Gome's management and accounting systems. He was quoted as saying that he planned to sell all his shares in the company as they 'have no prospect at all'.

Gome stock fell by up to 4.2 per cent the day after the article was published before closing the day at HK$2.72, down 3.2 per cent.

Chen later denied that he had a formal interview with the newspaper, saying the article did not represent his views. But the statements attributed to him were still seen by many as revenge for losing the boardroom battle against Gome's founder and jailed billionaire Wong Kwong-yu.

Wong and Chen were allies in 2006 when Gome bought China Paradise, the home appliance chain Chen founded. Wong invited Chen to be Gome's chief executive after the acquisition. But Wong later thought he was losing his control over Gome to Chen, who replaced him as the chairman after he was arrested for corporate bribery, insider trading and corrupt dealings.

Wong called for a shareholders' meeting in September to oust Chen and another executive director. Although his proposal was voted down, his sister Huang Yanhong and corporate lawyer Zou Xiaochun were elected as board directors in November.

In March, the company announced Chen had resigned as the chairman and was replaced by Wang Dazhong, a friend of Wong.

Gome said last night that Zou would represent the company in handling the legal action against Chen.