Office furniture retailer Lamex Holdings' chairman Clement Lam Ching-wah has denied claims in a letter received by the Business Post that it is in financial difficulties. The anonymous letter claimed Lamex had suffered 'a substantial financial setback' after its credit facilities were cut and it overexpanded in the mainland. Denying the claims, Mr Lam ruled out any solvency problems at Lamex but declined to reveal details until the release of the company's annual results on Friday. 'I am baffled by the claims and where they come from. They probably arose from mainland rivals as we have been the target of copycats,' he said yesterday. The letter claimed Lamex's expansion in Shanghai had been thwarted by a poor relationship with city authorities following a dispute with 'a well-connected government contact and businessman Cheng Wenhao last year'. It also claimed Lamex was facing a seven million yuan (about HK$6.51 million) tax penalty as a result of infringing regulations, which also was denied by Mr Lam. However, he confirmed Lamex was suing Mr Cheng for about three million yuan in unsettled debts for the three years to 1996. Mr Cheng was made sales director of Lamex's Shanghai division in 1993 but was sacked in 1996, he said. Mr Cheng was appealing a court decision two months ago that ruled in favour of Lamex and the company had already made a full provision on the debts, he said. Deputy chief executive Farida Chow Siu-fan denied the company was shutting down its Beijing and Shanghai offices. Instead, she said, it was growing with the addition of about 20 new distribution agents in the first six months of the year. 'The mainland division has been profitable, and we remain committed to the market,' she said.