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Hong Kong (AFP) Nov 11, 2010 Chinese electrical appliances giant GOME on Thursday said it had signed a new agreement with a firm controlled by its jailed founder, a move that could see the end of a bitter feud in the company. Trouble-plagued GOME has been embroiled in a power struggle between its board members and founder Huang Guangyu -- once China's richest man -- who was jailed in May for 14 years on bribery and insider-trading charges. Since then, Huang has waged a high-profile war from his cell against company executives, calling for his allies to be installed on GOME's board and its chairman to be sacked -- but both proposals were rejected by shareholders. In a sign of a possible resolution, Hong Kong-listed GOME announced it had signed a memorandum of understanding with Huang's Shinning Crown Holdings to appoint two non-executive directors picked by Shinning Crown to the board. GOME, China's biggest electrical appliance chain, said the new line-up would ensure "the company's future strategy can now be debated and determined in a constructive and consensual manner" through the board. "Entering into this MoU and ensuring the stable development of the business will best serve the interests of the company and shareholders as a whole," GOME said in a statement. Huang's imprisonment marked a spectacular fall from grace in a case that also ensnared several top Chinese police officials. He has stepped down from the board but remains the company's single biggest shareholder. GOME shares were 13.9 percent higher at 3.11 Hong Kong dollars (40 US cents) in afternoon trade following the news. Under the MoU, GOME will appoint a lawyer and Huang's sister, Yan Hong, as the two directors, according to Dow Jones Newswires. The deal will see GOME's board of directors expand from the current 11 members to 13, subject to approval from shareholders at a special general meeting. Beijing's High Court freed Huang's wife, Du Juan, on parole in August after commuting her three-year prison term for insider trading, but upheld his sentence. Huang was also fined 800 million yuan (120 million US dollars). In a separate statement, Shinning Crown said both sides wanted to maintain "a strong and stable management team", adding that it has "no current intention" to terminate agreements between GOME and Huang-owned stores, Dow Jones reported. In August, GOME said Huang had threatened to cut contracts between the company and hundreds of stores he still owns if the chairman was not sacked.
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