Zenith says 'stalling' by Founder behind dispute over 3b yuan
Inabilityof Zenith to get proceeds from the sale of its broking firmis behind feud, highlighting how business disputes can lead to graft charges
More details have emerged of the feud between Founder Securities and its second-largest shareholder that took a dramatic turn this week with the intervention of graft investigators.
Beijing Zenith Holdings' inability to obtain 3 billion yuan (HK$3.74 billion) from Founder Securities, a unit of Peking University-backed Founder Group, prompted the property developer to start an online war between the business partners over recent months. Zenith claims the brokerage is stalling on its demands.
Issues at the heart of their dispute were revealed in greater detail in documents released by Founder Securities on the Shanghai Stock Exchange yesterday. The papers were used to support Zenith's case against the broker during arbitration.
Although Founder Securities and Founder Group strongly denied corruption allegations levelled by Zenith, top executives of the firms were questioned by investigators on Sunday.
Zenith became Founder Securities' No2 shareholder with a 21.86 per cent stake on August 11 last year. Founder Securities has since failed to honour its contract with Zenith to hold a general meeting to change its board of directors and board of supervisors, Zenith alleged in the arbitration documents.
Zenith submitted its case against Founder Securities to a mainland arbitration tribunal on December 4. The case had yet to be decided, the broker said.
Because Founder Securities refused to change its boards, Zenith was unable to exercise its rights as a shareholder and failed to obtain the proceeds of its sale of Minzu Securities to Founder Securities, Zenith alleged in the arbitration papers.