Gu Chujun appears at a press conference on May 22, 2013. The banner placed beside Gu says "I am innocent." Photo: CFP

An appeal by former home appliance tycoon Gu Chujun against his conviction for economic crimes has been accepted by the Guangdong High People's Court, Gu announced on his Weibo account over the weekend.

After having been detained in 2005 and serving seven years in jail for accounting fraud and embezzlement, Gu, former president of Kelon Electrical Holdings Co, filed an appeal to Guangdong High People's Court, claiming that he was "completely innocent." His previous appeals after the verdict were rejected by the court, including in April 2009.

Gu obtained a commutation of his sentence and was released in September 2012.  

In 2008, the Foshan Intermediate People's Court in South China's Guangdong Province handed down a verdict on Gu, sentencing him to 10 years, fining him 6.8 million yuan ($1.12 million) and ordering him to pay back 165 million yuan that he had embezzled from the company, Reuters reported on August 20, 2008.

Gu was convicted for failing to disclose required information, falsely reporting registered capital, and capital embezzlement. 

As a high-profile player in the Chinese capital market, Gu once controlled five publicly listed companies before he was detained jail in 2005, media reports said.

When Gu founded Greencool Technology Holdings Co Ltd in Shunde, Guangdong Province in 2002, his patents accounted as more than 70 percent of the registered capital of the company, which was higher than the 20 percent limit set by the current company law for intangible assets, according to the court's hearing.

Gu said that when the authorities started the investigation in 2005, the company law had raised the limit of intangible assets as registered capital from 20 percent to 70 percent, so Gu did not commit any fraud in registered capital, according to a statement sent to the Global Times Sunday by Chen, Gu's assistant who only gave his surname.

China's securities regulators claimed that from 2001 to 2005, Gu illegally transferred capital from Kelon, which was owned by his company Greencool, to other investments.

Gu said a financial report released by accounting firm KPMG showed that Kelon had a capital surplus of about 389 million yuan, with nothing about the transfer of capital to Greencool, according to Sunday's statement.

Gu also accused the securities authorities of forcing Kelon to announce that it was under investigation but not reveal the subject and content of the probe.

He claimed this led to suppliers and investors losing confidence in the company, withdrawing money and ending their cooperation, the statement said.

Lei, a Beijing-based lawyer, who only gave her surname, told the Global Times Sunday that it is the responsibility of listed companies to disclose information to the public, no matter what the consequences will be.

Yan Yiming, a Shanghai-based lawyer who was a minor shareholder of Kelon, once requested that Gu be dismissed as director of Kelon in 2005 after Gu was detained.

Yan told the Global Times Sunday that he proposed to dismiss Gu as Kelon's director in order to protect the interest of shareholders.

Gu hid much information about the company and his detention made the situation worse, leading to the company's suspension of production, Yan said.

A source close to the management team of Kelon told the Global Times Sunday on condition of anonymity that Gu continued to buy other companies and make transactions between his company Greencool and the acquired ones in order to forge an attractive financial performance for Greencool.

Greencool got listed in Hong Kong in 2000 but then delisted on May 18, 2007.

Hisense Group acquired all of Gu's shares of Kelon, which represented 26.43 percent of the company's total shares for 680 million yuan, from Gu on September 9, 2005, when Gu was detained in Shunde.

Gu has more confidence in the rehearing as the country's new leadership is committed to building a fair society ruled by law, Gu's assistant Chen said.

Timeline

1995

Gu Chunjun founds Greencool Co Ltd

Jul 2000

Greencool goes public in Hong Kong

Oct 2001

Greencool acquires Kelon Electrical

Holdings Co in Shunde, Guangdong Province

May 2003

Greencool becomes the largest shareholder of Hefei Meiling Co Ltd

Apr 2005

Sichuan Securities Regulatory Bureau investigates Greencool for allegedly misappropriating Kelon's funds

Aug 2005

Gu is detained and Kelon is put under the trusteeship of local government 

Dec 2006

Gu formally leaves Kelon

May 2007

Greencool is delisted from Hong Kong exchange

Jan 2008

Gu is sentenced to 10 years in jail for embezzlement and accounting fraud

Sep 2012

Gu is released from prison in advance