Appliance maker wins court ruling

By Bei Hu  |   2009-1-12  |     NEWSPAPER EDITION

HISENSE Kelon Electrical Holdings Co, a Chinese maker of air conditioners and refrigerators, has won a lawsuit to recover money from Gu Chujun, the former chairman jailed for fraud.

A court in Foshan, Guangdong Province, last month ordered defendants, including Gu and his Guangdong Greencool Enterprise Development Co, to pay 30.15 million yuan (US$4.4 million) plus interest and also bear the costs of litigation, Kelon said in a statement to Hong Kong's stock exchange last Friday.

The company said it couldn't say if the judgment can be enforced, adding that the defendants may appeal.

Gu was sentenced to 10 years in jail and fined 6.8 million yuan by the same Foshan court in January last year. Gu was appealing his conviction for fraud and embezzlement, Xinhua news agency reported last February, citing his lawyer.

In the latest case, Kelon claimed that, under the control of Greencool and Gu, it signed a 2005 agreement to buy 300 tons of refrigerants from another defendant for 40.8 million yuan. The company received only 26 percent of the goods, while most of the payment was siphoned off to two companies related to Greencool and Gu, Kelon said.

In a separate suit, the Foshan court dismissed Kelon's claim for 12.3 million yuan overpaid for refrigerants purchased from Greencool and Gu because of insufficient evidence, the company said. Kelon claimed Greencool and Gu inflated the price to about 10 times the market value.

The company made a provision of 364 million yuan against 651 million yuan of accounts receivables owed by Greencool and other parties by December 2007, the statement said.

The Hong Kong-listed shares of Kelon, formerly known as Guangdong Kelon Electrical Holdings Ltd, have been suspended since June 2005. The stock exchange has said trading can resume once certain conditions are met, according to Bloomberg News.

Hisense Group, a household appliance maker, bought a stake in Kelon from Greencool in 2005 and renamed the company Hisense Kelon.