Kelon and chiefs fined over misstatements

The China Securities Regulatory Commission has fined Guangdong Kelon Electrical Holdings and some of its former senior officials for inflating profits and misstating cash levels and Kelon's minority shareholders will file a lawsuit against the company and its former auditor today.

CSRC fined Kelon 600,000 yuan and issued a warning and a 300,000 yuan fine to former chairman Gu Chujun, who is in jail on the mainland for alleged economic crimes, said Kelon chairman Tang Yeguo.

CSRC also warned and fined Liu Congmeng, who resigned as vice-chairman last month, and other former Kelon managers.

'CSRC's action is good for the market and investors. This will make it easier for minority shareholders to successfully sue Kelon,' Shanghai-based lawyer Yan Yiming said.

Mr Yan said he would file a lawsuit at the Guangzhou Intermediate People's Court today on behalf of minority shareholders against Kelon and other involved parties including its former auditor, Deloitte Touche Tohmatsu.

The minority shareholders were seeking 'a large sum' in compensation as they suffered losses from alleged forgery of Kelon's financial information, he said.

Mr Yan said CSRC had almost finished its investigation of Deloitte's role in Kelon's alleged wrongdoings and soon would decide whether to penalise the firm.