Tax investigation of chief executive deals Danone a further setback

The chief executive of French food giant Danone in the Greater China region, Qin Peng, has been investigated for alleged tax evasion, in the group's latest setback on the mainland, according to state media.

Xinhua cited confirmation from Guangdong's tax authority over the investigation on Mr Qin, who allegedly evaded a tax bill of more than 20 million yuan (HK$22.87 million) since becoming a senior executive of Danone's 25 corporate units on the mainland in 1996.

The probe triggered by some whistle-blowers started on July 7, it reported, adding that Danone declined to comment on the case.

This marks the latest twist in Danone's disastrous expansion on the mainland, where it has been locked in a bitter dispute with Hangzhou-based drink maker Wahaha Group since April last year.

Mr Qin's case is the latest obstacle to reconciliation talks between the two firms after a Swedish arbitration tribunal this week rejected Danone's request to prevent Wahaha and its chairman, Zong Qinghou, from raising production capacity outside the pair's joint ventures or setting up new ones.

Mr Qin reportedly had his salary of about 60 million yuan paid outside China over the past 12 years, allegedly dodging at least 20 million yuan in income tax during the period, Xinhua said. He admitted in a court hearing in Shenyang last month that Danone paid his salary outside the country, it said.