Gome Electrical Appliances Holdings Ltd (國美電器控股) replaced chairman Huang Guangyu (黃光裕), moving to distance itself from the company’s billionaire founder after he was detained by Chinese police.
Chief executive officer Chen Xiao (陳曉) will be acting chairman of Gome, which is “unconnected” to the probe, China’s biggest electronics retailer by stores said yesterday.
Huang and chief financial officer Zhou Ya Fei (周亞飛), who was also replaced, are being investigated for “certain suspected economic crime,” Gome said in a Hong Kong stock exchange filing.
Past convictions of Chinese tycoons including Shanghai Land Holdings Ltd’s (上海地產) Zhou Zhengyi (周正毅) and Euro-Asia Agricultural (Holdings) Co’s (歐亞農業) Yang Bin (楊斌) have caused their companies to collapse, fueling the urgency of Gome’s efforts to assuage the concerns of its investors and suppliers.
Chief rival Suning Appliance Co’s (蘇寧電器) shares have gained more than 20 percent this week on speculation the police probe may allow it to acquire Gome.
“Investors’ confidence in the company has vanished,” said Sophie Fan, an analyst at CSC Securities HK Ltd. in Hong Kong, who recommends selling Gome’s stock. “A lot of people are afraid that the company’s capital chain will be broken if it struggles to pay suppliers.”
Huang dropped out of school at 16 and traveled to Beijing with his brother, Huang Junqin (黃俊欽), armed with a bag of radios, batteries and other electronics devices from factories in his native Guangdong Province to sell in the Chinese capital. Two decades later, the 39-year old peasant’s son was ranked China’s richest man in Forbes Asia’s 2006 list of the nation’s wealthiest.
The Chinese retailer Huang built said it was “verbally informed” of the probe on Thursday. Beijing police confirmed they were investigating Huang in a faxed statement.
Gome is to the company’s best knowledge “unconnected” to the investigation of its founder, Chen said in a statement e-mailed yesterday by Brunswick Group LLC, hired by Gome to handle public relations.
Authorities haven’t asked Gome any questions in connection with the probe, he said.
Gome also said it had formed a “special action committee” to monitor the impact that the probe of Huang may have on the company. The committee will work to ensure Gome is “effectively insulated” from its founder’s “personal affairs,” Mark Greaves, a member of that committee, said in the e-mailed statement.
Huang is the richest businessman probed by the Chinese government, which in the past year has jailed at least three men who’ve appeared on lists of the nation’s wealthiest.
Huang was detained by police for allegedly manipulating shares of Shandong Jintai Group Co (山東金泰集團), a Chinese drugmaker controlled by his brother, Huang Junqin, Beijing-based Caijing magazine reported on Monday.
Gome’s shares have been suspended in Hong Kong since Monday.
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