More illegal asset sales in M&C venture uncovered

UNLAWFUL asset sales by a displaced legal representative of a Millennium & Copthorne (M&C) joint venture in China turned out to be bigger than the US$47.8 million earlier disclosed.

It has emerged that the legal rep had also sold other assets without approval. These assets comprise an 85 per cent interest in two parcels of development land in Guangdong, and a 70 per cent stake in a landscaping business and plantation nursery in Dongguan, Millennium & Copthorne Hotels New Zealand (MCHNZ) disclosed yesterday. Its exposure to these assets is US$2.5 million.

But it is unknown when these disposals were made – whether they came before or after the joint venture had registered its new company seal and the change of legal rep with the Chinese authorities.

While the joint venture is taking steps to safeguard the remaining assets located in Guangdong, MCHNZ noted that ‘further unauthorised disposals by Cheung cannot be ruled out’.

MCHNZ is a New Zealand subsidiary of M&C.

Earlier on Monday, it revealed that its Chinese joint venture Idea Valley Group Ltd (IVGL) was in trouble.

Its displaced legal rep cum chairman Cheung Ping Kwong had allegedly sold US$47.8 million worth of assets – West Coast Resort Hainan Hotel and a mixed-use development project in Dongguan – without permission. MCHNZ’s exposure to these two assets is US$18.8 million.

The joint venture is 75 per cent owned by First Sponsor Capital Ltd, which is 34 per cent owned by MCHNZ.

Mr Cheung had management rights over the joint venture, which he founded and in which he holds a 20 per cent stake. But when he was asked to relinquish his control of and executive appointments at IVGL last November, he refused to comply and instead seized control of the company seals, denied access to IVGL accounts, and sacked various employees.

MCHNZ yesterday said the joint venture had again on April 14 issued a public notice in a major newspaper in China to notify that the Chinese authorities have registered the new seal and change of legal rep, and to declare that the seal held by Mr Cheung is void. Its effective interest in the remaining assets of the joint venture in Guangdong is US$15.3 million.

Source : Business Times – 16 Apr 2010
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