Founder Securities denies related company embezzled 2.8 billion yuan

http://www.scmp.com/print/business/companies/article/1679643/founder-securities-denies-related-company-embezzled-28-billion

Related news: (1) Founder Group executives held in graft probe following Zenith allegations that executives have committed insider trading, selling state assets, rigging stocks, as well as bribery and forgery of documents (Link)

(2) Court orders 3b yuan in Founder Securities assets to be frozen; Beijing Zenith has accused Founder Group directors of various crimes, including insider trading, money laundering, embezzling state assets, forging documents (Link)

Founder Securities denies related company embezzled 2.8 billion yuan

Wednesday, 14 January, 2015, 5:26pm

Toh Han Shihhanshih.toh@scmp.com

Mainland brokerage Founder Securities has denied reports its business was disrupted after a related company, Founder Finance, embezzled 2.8 billion yuan (HK$3.5 billion) from Founder Securities for “emergency” purposes, but said it would deposit an unspecified amount of money with Founder Finance.Both companies share the same parent, Founder Group. On January 5, Founder Group chairman Wei Xin, chief executive Li You and president Yu Li were asked to assist in investigations by mainland authorities, Founder Group’s website said. Since then, Founder Group had replaced the three executives. Yu is also a director of Founder Securities, a Shanghai-listed financial firm, and chairwoman of Founder Finance, a financial institution. It is not clear whether she has relinquished those roles.

The authorities’ questioning of Wei, Li and Yu has been linked in media reports to the detention of Ma Jian, one of China’s top spy chiefs, and the investigation of Ling Jihua, a former aide to former president Hu Jintao.

“In 2014, Founder Securities’ related-party transactions with Founder Finance were legal. There is no case of Founder Finance embezzling 2.8 billion yuan of Founder Securities’ funds or Founder Securities sending [illegal] profits to its controlling shareholders,” Founder Securities said on the Shanghai Stock Exchange website yesterday.

Is said Founder Securities would deposit some funds with Founder Finance, but those funds would not exceed 5 per cent of Founder Securities’ gross assets or 50 per cent of Founder Securities’ bank deposits. Founder Securities would earn interest from its deposits with Founder Finance on commercial terms, it added.

Founder Securities will hold an extraordinary general meeting on January 20 in Changsha, the capital of Hunan province, to decide on a motion not to change its board of directors and board of supervisors before their terms end. Founder Securities’ second-biggest shareholder, Beijing Zenith, has been pushing for Founder Securities to change its boards, according to documents from Zenith’s arbitration proceedings against Founder Securities. Zenith, a mainland property developer, is suing Founder Securities for 3 billion yuan.

In another Shanghai Stock Exchange announcement yesterday, Founder Securities admitted that “flaws in the disclosure of its finances, its acquisition of Minzu Securities from Zenith and the actual controlling shareholder of Zenith, were still not resolved”.

In an announcement on Zenith’s website published on January 9, Zenith said its controlling shareholder, Guo Wengui, “hopes to meet Founder Group’s new management to resume normal relations as soon as possible, to uphold the legal rights of Founder Securities and shareholders”.

But in that same announcement, Zenith alleged “a criminal gang” including Wei, Li and Yu illegally gained control of more than 65 per cent of Founder Group and fraudulently obtained more than 60 billion yuan in loans.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s