Top Biz News

Gome China unit gets Beijing rap for bribery

By Wing-Gar Cheng (China Daily)
Updated: 2010-03-02 10:47

HONG KONG - Gome Electrical Appliances Holdings Ltd, China's second-biggest electronics retailer by market value, said a unit was indicted for bribery at the Second Intermediate People's Court of Beijing.

Hong Kong-listed Gome will "actively defend" itself against the accusations, it said in a statement to the city's stock exchange on Monday. A copy of the indictment was first received on Feb 25, it said.

The mainland unit Gome Appliance Co was suspected of the offence between 2006 and 2008, when Gome Electrical founder Huang Guangyu was the Chinese unit's legal representative, the retailer said, citing a copy of the indictment. He was charged with illegal operations, insider trading and offering bribes on Feb 12, China News Services reported, citing a Beijing Court.

The "worst case scenario" of the unit being found guilty will involve a fine that will "not have any substantive adverse effect on the operations or financial condition" of the company, Gome said.

The offence involved "part of the aggregate amount of 4.56 million yuan ($668,034)," Gome said in the statement.

Share performance

Gome rose 1.6 percent to HK$2.48 in Hong Kong trading. The stock has lost 12 percent this year, compared with a 4 percent decline for the benchmark Hang Seng Index.

The company and its subsidiaries didn't previously receive legal documents saying they're suspected of criminal offences or are being investigated by the Chinese government, the statement said.

Huang, Gome's founder and largest shareholder, was subjected to "residential surveillance" by Beijing's police on Nov 18, 2008 before being detained on Jan 23, 2009 and placed under arrest on March 2, 2009, Gome said.

He was suspected of offences involving insider dealing, illegal operation and "bribery by organization," the statement said. Huang owns 28 percent of Gome, according to data compiled by Bloomberg.

Huang, China's second-richest man in 2008 according to Forbes Asia, resigned from Gome's board January last year.

He was ranked China's wealthiest man by the Shanghai-based Hurun Rich list with a fortune valued at $6.3 billion in 2008.

Forbes Asia estimated his wealth at $2.7 billion that year.

Gome's net income in the nine months to September 2009 fell 39.4 percent to 965 million yuan from a year ago. Sales fell 13.6 percent to 31.4 billion yuan.

The retailer of home electronic appliances is revamping its existing store network, opening new outlets and paying debt after obtaining $431 million of new financing in June of 2009.

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