China High Speed Transmission Equipment Group announced on Tuesday, that its wholly-owned subsidiaries have initiated legal proceedings in the High Court of Hong Kong, seeking to recover approximately USD 929.6 million (RMB 6.64 billion) in misappropriated funds. The lawsuit, filed on March 31, 2025, targets former executives, a major business partner, and numerous associated individuals and companies for their alleged role in the mismanagement of substantial funds, according to a legal statement.
The legal action is directed against Fang Jian, the former Executive Director and Legal Representative of the subsidiaries, Fullshare Holdings Limited (0607.HK), Five Seasons XVI Limited, Ji Changqun, Chairman of Fullshare, 16 other companies involved in commodity trading agreements, and 10 individuals associated with Fullshare, accused of improper involvement in financial and contract management.
The case is rooted in the alleged mishandling of agreements that led to the loss of significant financial resources. As of October 31, 2024, the total amount owed to the subsidiaries under these agreements was RMB 6.64 billion. Despite the Group's efforts to resolve the issue through demand letters, responses from the defendants have been insufficient, with some claims stating that the owed amounts were transferred to third parties based on improper instructions.
In response, the subsidiaries have reported the issue to Chinese authorities, which have initiated a formal criminal investigation into potential embezzlement and fund misappropriation. Preliminary findings suggest that Fullshare’s personnel were significantly involved in decision-making and management processes related to the subsidiaries' trading activities. Financial records retrieved from Fullshare’s premises in December 2024 indicate that Fullshare had considerable control over the financial operations of the subsidiaries during the relevant period.
The Group is committed to holding the responsible parties accountable, as stated by Chairman Hu Jichun. "We are duty-bound to rectify any misconduct that undermines corporate governance and shareholder value," he said. "Our priority is to protect the interests of all shareholders, particularly our minority shareholders, and uphold our obligations to the broader market."
The Group has established an Independent Investigation Committee to oversee the matter, with a preliminary report due by mid-May. Additionally, interim remedial measures have been implemented, including enhanced oversight on commodities trading operations, strengthened cash flow controls, and optimized management structures.
Founded in 1969, China High Speed Transmission Equipment Group is a leading manufacturer of high-speed and heavy-duty gears, serving markets in wind energy, rail transport, industrial machinery, and new energy vehicles. Despite this setback, the company remains focused on improving its internal controls and ensuring robust corporate governance.
Bd-pratidin English/ Jisan
