By GE Zhenwei, XU Shiqi
Police were called to the offices of Vatti Corporation in Zhongshan in the Guangzhou–Shenzhen conurbation after a scuffle broke out Friday morning.
CEO of subsidiary Vatti Electronics (VE) WU Gang was locked out of the building, having attempted to stop auditors from doing their work.
‘Mob’ of accountants
Wu was at home when a group of accountants arrived to inspect VE’s books. Staff called the CEO to the office and when he arrived at the scene, he was briefly admitted before being kicked out and barred from re-entering.
Outside the office, an aggrieved Wu told reporters that a “mob” sent by parent company Vatti Corp had forced their way into the CFO’s office and fired her on the spot. The auditors, according to Wu, then forced open the company safe and began to examine the contents. They refused to talk to him.
The showdown can be traced back to August last year when Wu, a founding member of Vatti Corp, left the board. A month later, still CEO of VE and controlling shareholder, Wu proposed the dissolution of VE, a move rejected by the board that Wu had so recently departed.
Stealing trade secrets
A notice issued by Vatti Corp on March 25 informed investors that the annual report had been delayed due to Wu’s obstruction of the annual audit.
Vatti Corp makes and sells household appliances like ovens, hobs, and cooker hoods. In 2005, the brand was declared a "Famous Chinese Trademark" by the State Administration of Industry and Commerce. VE produces parts for Vatti appliances, but Vatti has recently redirected most of its orders to other suppliers, causing an 80 percent drop in VE revenue, and prompting Wu to quit the board.
Until Friday, Wu held 30 percent of VE and still controlled the company seal. The parent company offered to buy Wu’s shares, but the offer was rejected. It is not clear whether Wu remains CEO of VE or, if not, when he was fired and by whom.
In terms of “obstructing auditing,” Wu said he did so because Vatti was trying to “steal trade secrets under the pretense of auditing.”
“They unilaterally nullified contracts, unilaterally canceled orders, and unilaterally called me obstructive. What am I supposed to do?” Wu asked reporters.
Falling quality standards
Vatti issued another statement on Friday afternoon saying its actions were “completely lawful,” and that the company would take legal action against anyone who suggested otherwise.
A spokesperson told Jiemian News that orders were canceled because VE no longer meets its manufacturing standards.
Vatti was the first non-state-backed company to go public in Zhongshang. VE contributes 3 percent and 6 percent of the parent’s revenue and profits.
