• Wed
  • Aug 27, 2014
  • Updated: 6:09pm

Gome Electrical Appliances

GOME Electrical Appliances Holding Ltd is an electrical appliance retailer in China and Hong Kong founded by Wong Kwong Yu in 1987, adopting the “Gome” brand name in 1993. It listed in Hong Kong in 2004, and in 2008 police revealed that Wong was being investigated for stock manipulation. He resigned in early 2009 and was sentenced to 14 years in prison.

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Jailed tycoon Wong Kwong-yu and wife agree to pay HK$420m to Gome in misconduct case

Jailed company founder Wong Kwong-yu and wife settle with the SFC over misconduct case involving a share repurchase deal in 2008

PUBLISHED : Tuesday, 11 March, 2014, 10:17pm
UPDATED : Wednesday, 12 March, 2014, 4:17am

Jailed mainland billionaire Wong Kwong-yu, founder and former chairman of Gome Electrical Appliances, and his wife Du Juan will pay HK$420.6 million to the company as compensation for misconduct in a 2008 share repurchase deal.

Their agreement with the Securities and Futures Commission, announced yesterday, ends a nearly five-year legal battle between the couple and the regulator. The SFC has agreed to stay its proceedings and take no further action after the payment, which equals the gains they made from the deal.

Wong, known as Huang Guangyu on the mainland, was a high school dropout from Shantou who set up a street-side electronic stall in 1987 that was later named Gome and turned into the country's largest electronic appliance retailer with over 1,000 stores. The company's listing in Hong Kong in 2004 helped Wong climb to the top of the Hurun rich list in 2007.

Wong did not make full disclosure of such personal interest
SFC STATEMENT

Gome lost its top billing to its rivals after a Beijing court in 2010 sentenced Wong to a 14-year prison term and a fine of 600 million yuan (HK$759 million) for insider trading and other financial crimes.

In August 2009, the SFC initiated legal action against the couple. It alleged that as directors, they had organised two share repurchases of Gome - in January and February 2008 - amounting to HK$2.2 billion to raise cash for repaying a HK$2.4 billion personal loan from a financial institution.

The SFC said Wong had directed Gome to repurchase most of the 136.94 million shares originally held by him. The shares bought from him accounted for 70 per cent of the total repurchase.

In reaching the settlement with the SFC, Wong and Du agreed that they had breached their directors' duties to ensure a repurchase was in the best interest of the company. Instead, they engineered the deal to make personal gains at the expense of Gome.

"Wong did not make full disclosure of such personal interest as he may have had in the share repurchase as a seller of the Gome shares," the SFC statement said.

"Hong Kong-listed companies are not personal fiefdoms. Corporate actions must be properly authorised, they must have proper purposes and fundamentally directors must take into account the best interests of the company and all its shareholders," said Mark Steward, executive director of the SFC.

"The SFC will continue to take what action is necessary to ensure the interests of the investing public are adequately protected."

Gome will let its small shareholders decide if they approve the compensation, the SFC said.

Even though Wong is behind bars, the couple remain the biggest shareholders of Gome.

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johnyuan
Brilliant mind darkened by greed.
 
 
 
 
 

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