Huang Guangyu, the founder of Gome Electrical Appliances Holdings Ltd., lost his appeal of a 14- year sentence for graft as his wife was freed from jail on a conviction for a related charge, a Chinese newspaper reported.
The Beijing High People’s Court ruling came today as Huang, once China’s richest man, fought to keep control of the retail chain by trying to oust his replacement as chairman.
The court rejected Huang’s appeal while giving Du Juan a reprieve on her 3 ½-year sentence, the Securities Times newspaper reported, without citing anyone. Du was then released, the Shenzhen-based newspaper said. Zhang Shiguo, Huang’s lawyer in the appeal, declined to comment to Bloomberg News.
Gome sued Huang in Hong Kong this month, claiming damages for a breach of fiduciary duty and seeking profits owed the company in connection with a 2008 share buyback. The company said in a separate statement that Huang’s arrest and conviction hurt its ability to access capital.
Huang, also known as Wong Kwong Yu, has called for a special general meeting to remove Chairman Chen Xiao and cancel a mandate to issue new shares that may dilute his stake in the retailer. He is the biggest shareholder in Gome with 34 percent, according to data compiled by Bloomberg.
“On personal level, people at Gome are pleased for Du Juan that she can be back with her children,” the retailer said in an e-mailed statement. “Our issue is not with Ms Du or even with Mr. Wong. It is with what Mr. Wong wants to do, which we do not believe is in the best interests of GOME and its shareholders.”
Huang was convicted in May of bribery, insider trading and illegal operations. His wife was convicted of insider trading. Huang’s appeal was the only one afforded him under Chinese law.
Chen took over as Gome’s acting chairman in November 2008 after Huang was detained by Beijing police earlier that month. Huang, 41, resigned as chairman in January 2009.
Gome said today a company controlled by Huang sent a letter on Aug. 27 pledging to end procurement and management agreements with the Hong Kong-listed company if Huang’s proposals were rejected. A special general meeting will be held Sept. 28, the company said in a filing to Hong Kong’s stock exchange.
Terminating the agreements will not significantly affect the listed company, Gome said. The board has not decided whether to issue new shares, it said.
Gome dropped 3.1 percent to HK$2.16 at the 4 p.m. close of Hong Kong trading, its lowest level since May 25. The benchmark Hang Seng Index rose 0.7 percent. The stock has lost 23 percent this year, compared with a 5 percent drop in the index.