Court orders 3b yuan in Founder Securities assets to be frozen
A court has frozen three billion yuan (HK$3.7 billion) of assets of Founder Securities following complaints by stakeholder Beijing Zenith Holdings.
A court has frozen three billion yuan (HK$3.7 billion) of assets of Founder Securities following complaints by stakeholder Beijing Zenith Holdings.
The freeze is the latest episode of legal battles surrounding the Founder Group, whose directors have been alleged to be linked to corruption scandals.
Founder Securities, the brokerage unit of the conglomerate with businesses in technology, health care and properties, said in a Shanghai stock exchange filing that it received the order from a court in Changsha , Hunan province, following an arbitration application from Beijing Zenith, its second-largest stakeholder. It said 1.77 billion yuan in its bank accounts had been frozen immediately, "affecting the operation of the company".
Beijing Zenith, a property developer, said in its Sina Weibo post that it was seeking compensation of three billion yuan in the arbitration, more than the 2.9 billion yuan Founder Securities had posted as revenue for 2013.
"Founder Group's chairman Wei Xin and chief executive Li You have been manipulating the group's companies for years … and embezzled tens of billions of yuan," the post said. "This has not only hurt shareholders' interests in its subsidiaries such as Founder Securities but also led to the loss of state-owned assets."
Beijing Zenith has accused Founder Group directors of various crimes, including insider trading, money laundering, embezzling state assets, forging documents and mafia links, in a series of jaw-dropping statements since the start of November.
The two companies had only just joined hands in public in August, when Beijing Zenith's majority-owned Minzu Securities merged with Founder Securities in a 13-billion-yuan deal.
Now Beijing Zenith claims Li and other Founder directors had in July 2013 pocketed 355 million yuan through PKU Healthcare, another Founder subsidiary in which it was then the third-largest shareholder.
The dispute escalated when Beijing Zenith sued Founder Securities last month, demanding compensation of 1.26 million yuan. Within days, Founder Securities sued Minzu.
Public interest in what had earlier appeared to be a falling out between business partners intensified in the past week as rumours emerged online linking Founder with former Hu Jintao aide Ling Jihua , who is under investigation.
Stories saying police stormed the Founder headquarters on December 19 to arrest executives including chief executive Li and Gu Liping, Ling's wife, went viral. Mainland media reported that Beijing police had confirmed they had visited the company for investigation of "other cases" but declined to disclose any further information.
In a statement on Christmas Eve, Beijing Zenith said Li "had fled overseas" and other Founder directors including Wei had been detained by the police. It dismissed Founder Securities' accusation that it was "fabricating and disseminating online rumours".
Founder Group, which has denied all charges and until yesterday insisted its companies had not been affected, could not be reached for comment.
Wei made his first and last appearance on Weibo when he opened an account on December 25 and uploaded a selfie, indicating he was safe and free.
The group is 70 per cent held by Peking University. The row is estimated to have cost its six listed companies at least 5.7 billion yuan in market capitalisation, with PKU Healthcare stocks down 30 per cent and Founder Technology down 10 per cent in the past two months. The group's Hong Kong-listed unit, PKU Resources, has also lost 30 per cent.
