Shares of the world’s largest pork producer WH Group tumbled 11% on Wednesday after the company’s billionaire chairman Wan Long was publicly accused by his son of financial misdeeds.
Wan Long is a 81-year-old veteran of the meat processing industry and the controlling shareholder of WH Group. His son Wan Hongjian revealed in a report that Wan Long and Guo Lijun, CFO of WH Group, made unfavorable financial decisions that led to losses of over 800 million yuan for the company. Both individuals had ignored the strong opposition of employees from its domestic subsidiary Shuanghui International and imported American pork heads at a price of 25,800 yuan per ton, higher than the market price, according to the report.
“He saw Shuanghui’s mistake. He just used so-called a decision-making mistake to transfer assets,” Wan Hongjian pointed out.
Wan Long was also accused of receiving a $200 million payment through a private share transfer when Shuanghui completed a state-owned enterprise reform in 2007 and didn’t file income tax.
Hong Kong-listed WH Group denied the reports of alleged fraud, tax evasion and mismanagement of company funds by Chairman Wan Long.
WH Group’s business covers pig breeding, pig slaughtering, processing and sales of meat products and fresh pork. It currently controls a 70.33% share of Shuanghui International and a 100% share of Smithfield.
Shuanghui’s state-owned enterprise reform lasted quite a while. In 2002, Shuanghui began to plan the management buyout. But, since the buyout involved the restructuring of a state-owned enterprise and the pricing of state-owned assets, the management by objectives (MBO) of Shuanghui was completed through an overseas entity named Rotex (Hong Kong). Later, in March, 2006, WH Group was registered in the Cayman Islands. Only in 2013 was WH Group listed in Hong Kong after its acquisition of Smithfield and subsequently became the controlling shareholder of Shuanghui.
Wan Long last week stepped down as chief executive of the pork-industry giant and handed the reins to Guo Lijun, who had been the company’s chief financial officer. In the article, Wan Hongjian pointed out that the trigger for his public break with Wan Long was that Wan Long forcibly promoted Guo Lijun as CEO of WH Group despite substantial opposition to the move, including his own. Wan Hongjian believed that Guo should be responsible for Shuanghui’s loss.
“My father is a deity in Shuanghui’s headquarter and in our own family. He is an able person, a cruel person and a wicked person,” Wan Hongjian said, “He liked to only look at the numbers in the bankbook. His greed is beyond imagination and he has only ever focused on capital operation.”
Wan Hongjian went so far as to publicly accuse his father of taking advantage of his authority in Shuanghui to seize the equity of its employees and managers, making a profit of more than 5 billion yuan. Wan Long was also accused of embezzling 350 million stock shares originally planned to be rewards for the management team in 2017.