Kelon sues jailed chief to wrest pivotal stake

Guangdong Kelon Electrical Holdings is suing former chairman Gu Chujun, his firms and associates for 331.6 million yuan in a bid to get his controlling stake in the company.

Gu, in a mainland jail accused of economic crimes, signed a deal last year to sell the shares but has refused to give them up.

Kelon subsidiaries initiated legal proceedings at the Intermediate People's Court of Foshan, Guangdong province, against Gu, his firms and associates, said vice-chairman Liu Congmeng. 'The defendants entered into sales and purchase contracts to conceal their attempt to embezzle the funds of Kelon,' he said.

The lawsuit said goods were not delivered to Kelon despite payments being made.

The Hong Kong and Shenzhen-listed firm made a provision of 154.37 million yuan last year for bad debts related to the lawsuits, which would reduce profits for that year by 154.37 million yuan.

The firm, which announced a net loss of 1.34 billion yuan for the first nine months last year, did not rule out damage to future profits by the lawsuits.