China's Gome sues ex-chairman over interview

June 22, 2011 - 12:44 AM

HONG KONG (AP) — Gome Electrical Appliance Holdings Ltd., China's second-biggest electrical appliance retailer, is suing its former chairman over an interview he gave to a newspaper, saying it resulted in financial damage to the company.

Gome said in a statement late Tuesday that it filed a lawsuit in the Beijing Second Intermediate People's Court against Chen Xiao. The company said Chen breached an agreement with Gome by giving false and misleading information in an interview published in early May.

The legal spat is a sign of the lingering bitterness between Chen and Gome's jailed founder, Huang Guangyu, after a protracted disputed over control of the company ended with Chen resigning in March. Chen is the former protege of Huang, a billionaire serving a 14-year prison sentence for insider trading and other crimes.

Gome alleged Chen breached an agreement to prevent "irreparable damage" to the company's reputation when he gave the interview to the newspaper.

The story in the 21st Century Business Herald quoted Chen as criticizing Gome and said he planned to sell his shares because it had no prospects, according to Hong Kong's South China Morning Post and other newspaper reports. Chen later denied giving an official interview, saying it was an informal talk with the reporter, and the story was deleted from the paper's website, reports said.

In 2008, Huang was estimated to be China's wealthiest tycoon, with a net worth of $6.3 billion. But he ran into legal problems after branching into lucrative real estate and financial dealings. He was detained in 2008 and convicted two years later of insider trading, illegal enrichment and paying bribes.

Chen, whose own struggling retail chain was bought by Gome, was brought in to replace Huang when he resigned as chairman in 2009.

Gome is China's second-biggest appliance retailer by market capitalization.

(This version CORRECTS Corrects that Gome is second-largest electrical appliance retailer. Adds details)