China High Speed Transmission Equipment Group Commences Legal Proceedings for Fund Misappropriation of RMB 6.64 Billion
China High Speed Transmission Equipment Group has initiated legal proceedings in Hong Kong's High Court against multiple defendants, including former Executive Director Fang Jian and Fullshare Holdings , for the alleged misappropriation of RMB 6.64 billion from its subsidiaries.
The legal action stems from uncollected receivables and pre-payments under certain commodity trading agreements. The company discovered that Fullshare personnel were improperly involved in decision-making and management of trading business, with financial records found at Fullshare's premises. Criminal investigations have been initiated in the PRC regarding suspected embezzlement.
The company has formed an Independent Investigation Committee, with a preliminary report expected by mid-May. Interim remedial measures implemented include enhanced oversight of trading operations, improved cash flow controls, and strengthened corporate governance.
China High Speed Transmission Equipment Group ha avviato procedimenti legali presso l'Alta Corte di Hong Kong contro più imputati, tra cui l'ex Direttore Esecutivo Fang Jian e Fullshare Holdings, per presunta appropriazione indebita di 6,64 miliardi di RMB dalle sue filiali.
L'azione legale deriva da crediti non incassati e prepagamenti sotto determinati contratti di trading di merci. L'azienda ha scoperto che il personale di Fullshare era coinvolto in modo improprio nel processo decisionale e nella gestione del business commerciale, con registrazioni finanziarie trovate presso i locali di Fullshare. Sono state avviate indagini penali nella RPC riguardo a sospetti di appropriazione indebita.
L'azienda ha costituito un Comitato di Indagine Indipendente, con un rapporto preliminare previsto entro metà maggio. Le misure correttive temporanee implementate includono un controllo maggiore delle operazioni di trading, un miglioramento dei controlli sul flusso di cassa e un rafforzamento della governance aziendale.
China High Speed Transmission Equipment Group ha iniciado procedimientos legales en el Tribunal Superior de Hong Kong contra múltiples demandados, incluyendo al ex Director Ejecutivo Fang Jian y Fullshare Holdings, por la supuesta malversación de 6.64 mil millones de RMB de sus filiales.
La acción legal se origina de cuentas por cobrar no cobradas y pagos anticipados bajo ciertos contratos de comercio de mercancías. La empresa descubrió que el personal de Fullshare estaba involucrado de manera inapropiada en la toma de decisiones y en la gestión del negocio comercial, encontrándose registros financieros en las instalaciones de Fullshare. Se han iniciado investigaciones penales en la RPC respecto a sospechas de malversación.
La empresa ha formado un Comité de Investigación Independiente, con un informe preliminar esperado para mediados de mayo. Las medidas correctivas interinas implementadas incluyen una mayor supervisión de las operaciones comerciales, un mejor control del flujo de efectivo y un fortalecimiento de la gobernanza corporativa.
중국 고속 전송 장비 그룹은 홍콩 고등법원에서 전 이사장 Fang Jian과 Fullshare Holdings를 포함한 여러 피고를 상대로 66.4억 위안의 자회사를 부당하게 유용한 혐의로 법적 절차를 시작했습니다.
법적 조치는 특정 상품 거래 계약에 따른 미수금 및 선지급금에서 비롯됩니다. 회사는 Fullshare 직원들이 거래 비즈니스의 의사 결정 및 관리에 부적절하게 관여하고 있었음을 발견했으며, Fullshare의 사무실에서 재무 기록이 발견되었습니다. 중국 본토에서는 횡령 혐의에 대한 형사 조사가 시작되었습니다.
회사는 독립 조사 위원회를 구성하였으며, 5월 중순까지 초기 보고서를 예상하고 있습니다. 시행된 임시 시정 조치는 거래 운영에 대한 감독 강화, 현금 흐름 통제 개선 및 기업 거버넌스 강화가 포함됩니다.
China High Speed Transmission Equipment Group a engagé des poursuites judiciaires devant la Haute Cour de Hong Kong contre plusieurs défendeurs, dont l'ancien directeur exécutif Fang Jian et Fullshare Holdings, pour l'allégation de détournement de 6,64 milliards de RMB de ses filiales.
Cette action légale découle de créances non recouvrées et de paiements anticipés dans le cadre de certains contrats de négoce de marchandises. L'entreprise a découvert que le personnel de Fullshare était impliqué de manière inappropriée dans la prise de décision et la gestion des affaires commerciales, des documents financiers ayant été trouvés dans les locaux de Fullshare. Des enquêtes criminelles ont été ouvertes en RPC concernant des soupçons de détournement de fonds.
L'entreprise a constitué un Comité d'Enquête Indépendant, avec un rapport préliminaire attendu d'ici la mi-mai. Les mesures correctives temporaires mises en œuvre incluent un contrôle renforcé des opérations commerciales, une amélioration des contrôles de flux de trésorerie et un renforcement de la gouvernance d'entreprise.
China High Speed Transmission Equipment Group hat rechtliche Schritte vor dem High Court in Hongkong gegen mehrere Beklagte, darunter den ehemaligen Geschäftsführer Fang Jian und Fullshare Holdings, wegen der angeblichen Unterschlagung von 6,64 Milliarden RMB aus seinen Tochtergesellschaften eingeleitet.
Die Klage resultiert aus nicht eingezogenen Forderungen und Vorauszahlungen aus bestimmten Rohstoffhandelsverträgen. Das Unternehmen stellte fest, dass Mitarbeiter von Fullshare unangemessen in die Entscheidungsfindung und das Management des Handelsgeschäfts involviert waren, wobei Finanzunterlagen in den Räumlichkeiten von Fullshare gefunden wurden. In der VR China wurden strafrechtliche Ermittlungen wegen des Verdachts der Unterschlagung eingeleitet.
Das Unternehmen hat einen unabhängigen Untersuchungsausschuss gebildet, dessen vorläufiger Bericht bis Mitte Mai erwartet wird. Zu den umgesetzten vorläufigen Abhilfemaßnahmen gehören eine verbesserte Aufsicht über die Handelsoperationen, verbesserte Cashflow-Kontrollen und eine Stärkung der Unternehmensführung.
- Company taking decisive legal action to recover RMB 6.64 billion in misappropriated funds
- Criminal investigation initiated by PRC authorities
- Implementation of enhanced internal controls and oversight measures
- Formation of Independent Investigation Committee with external consultant
- Significant financial loss of RMB 6.64 billion through alleged fraud
- Major corporate governance failure in subsidiaries' trading operations
- Potential ongoing financial impact from unrecovered funds
- Reputational damage from internal control weaknesses
The Legal Proceedings
The action is brought against the following defendants (the "Defendants"):
(1) Fang Jian (former Executive Director of the Company and former Legal Representative of the Relevant Subsidiaries),
(2) Fullshare Holdings Limited ("Fullshare", Stock Code: 0607.HK),
(3) Five Seasons XVI Limited, a wholly-owned subsidiary of Fullshare,
(4) Ji Changqun (Chairman and Executive Director of Fullshare),
(5) 16 other companies (the "Counterparties") which are counterparties to certain agreements for the sale and purchase of commodities (the "Agreements"), and
(6) 10 other individuals who were Fullshare personnel improperly involved in the administration, financial management and contract approval of the Relevant Subsidiaries.
The claim is based on the alleged wrongful conduct of the Defendants, which resulted in the loss of
The legal action reflects the Group's commitment to safeguarding the interests of all shareholders, particularly minority shareholders, in light of potential unlawful activities by the Defendants.
"Our Board takes this matter very seriously and has taken decisive steps to protect the Group's interests and uphold our obligations to shareholders," said Hu Jichun, Chairman of the Group. "We are duty-bound to rectify any misconduct that undermines corporate governance and shareholder value. We will pursue all necessary legal remedies to ensure accountability and transparency."
Key Considerations
As of 31 October 2024, receivables and pre-payments due to the Relevant Subsidiaries under the Agreements totaled approximately RMB 6.64 billion.
Demand letters were sent to the Counterparties, which were not properly answered. Amongst the limited replies received, the Counterparties claimed that amounts owed were transferred to third parties following instructions from the Relevant Subsidiaries.
The Relevant Subsidiaries have reported to the authorities in the PRC, which have, after vetting, initiated formal criminal investigation into suspected embezzlement and misappropriation of the Relevant Subsidiaries' funds and assets by individual(s) in position(s) of authority.
Whilst the details surrounding the Relevant Amounts are still under independent investigation and formal criminal investigation, the Company and the Relevant Subsidiaries have been advised of the following:
- Meeting minutes, commercial records and communication records of the Relevant Subsidiaries indicate that Fullshare personnel, reporting to Ji Changqun, were improperly involved in the decision-making and management of the trading business of the Relevant Subsidiaries for which the Agreements were signed.
- According to Nanjing Drive's employees interviewed and financial records reviewed, Fullshare's financial personnel and accountants directly handled various payments between the Relevant Subsidiaries and the Counterparties;
- Financial records of the Relevant Subsidiaries were recovered from Fullshare's premises at Fengsheng Science Park in December 2024, after repeated demands from the current management of Nanjing Drive, demonstrating the potential control of Fullshare over the financials of the Relevant Subsidiaries;
- There existed a parallel contract approval procedure of the Relevant Subsidiaries where former legal counsel and other former or current executives of Fullshare were substantively involved;
- Crucially, public company search records show that certain Counterparties, which received the funds of the Relevant Subsidiaries, could be related to Ji Changqun or Fullshare. Nanjing Drive's current and former employees also indicated that the Counterparties are indirectly connected to Fullshare; and
- Fang Jian was responsible for the operation and management of the Relevant Subsidiaries when the Agreements were executed. Fang Jian also oversaw the management and approval of the company seal for these subsidiaries at the relevant time.
In view of the above, the Relevant Subsidiaries have started to pursue the Defendants named in the legal action for the Relevant Amounts. Further defendants may be added to the proceedings as the investigations progress.
Actions taken
Upon discovering the Agreements, the Board promptly formed an Independent Investigation Committee to oversee an investigation into the matter. An independent investigative consultant was engaged and is expected to deliver a preliminary report of its findings by mid-May.
The Board and the Group have reiterated their unwavering commitment to strengthening the Group's internal controls and have to date implemented interim remedial measures, including:
- Enhanced oversight and control of commodities trading operations
- Streamlined cash flow controls and inventory management
- Optimized senior management roles to ensure robust corporate governance
- Heightened management oversight and compliance
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About the Group
China High Speed Transmission Equipment Group Co., Ltd. (Stock Code: 0658.HK, together with its subsidiaries, the "Group") operates as a professional corporation principally engaged in the manufacture of high-speed and heavy-duty gears. The Group was established in 1969 and listed in
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SOURCE China High Speed Transmission Equipment Group
FAQ
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