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.

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.