Photo: VCG

 The owner of China’s largest meat processing giant, WH Group, has run into murky waters after Wan Hongjian, the older son of Wan Long, the company's 81-year-old founder, made several accusations against his father on several matters in an open letter, including avoiding taxes on $200 million, which the company later strongly denied.

After the letter was published the Hong Kong stocks of WH Group fell 11.33 percent and closed at HK $5.95 on Wednesday.

WH Group, formerly known as Shuanghui Group, immediately posted a statement clarifying the allegations after the stock market fluctuation.

All the accusations by Wan Hongjian,  former director of the company who was exonerated for misconduct are untrue and misleading and WH Group reserves the right to take legal action against Wan Hongjian or any person responsible for the allegations, according to the company's statement on late Wednesday.

However, the open letter by Wan Hongjian, has already drawn wide media and public attention, with more than 100,000 viewers and broad media reports, putting the company under unprecedented spotlight.

One highlight of the letter is the alleged undeclared taxes. According to Wan Hongjian, in 2007, CDH investment firm privately awarded Wan Long 5 percent of Shuanghui’s stocks free of charge for unexplained reasons, and because the two sides were unable or unwilling to open the deal, the stock was then directly sold to a company in Hong Kong. 

As a result, Wan Long made a profit of  $200 million that was deposited at DBS Bank in Hong Kong without declaring , said Wan Hongjian.

Wan Long was also accused of being involved in substantially raising the settlement price for imports from the US, from 21,000 to 25,800 yuan per ton, with imports approaching 100,000 tons. Imports from the US to China caused a loss of more than 800 million yuan to Shuanghui, said the open letter.

Other allegations by Wan Hongjian included the previous acquisition of Smithfield Foods. Shuanghui paid $7.1 billion for the shares of the US pork producer in October, 2013, a move which Wan Hongjian opposed.

While the acquisition of Smithfield may be one of the main conflicts between father and son as media report, the trigger for Wan Hongjian to be removed from the company’s post was his ‘inappropriate attacks on the company's property’ as the company stated in June.

WH Group issued a dismissal announcement in June removing Wan Hongjian, who was expected to succeed his father, from the management post with immediate effect, according to media reports.

Global Times