Zong Qinghou probed over tax

Zong Qinghou probed over tax

Billionaire beverage entrepreneur Zong Qinghou is being investigated for allegedly evading some 300 million yuan ($42.9 million) in taxes.
The tax department of Hangzhou, Zhejiang province, the home base of beverage giant Wahaha Group, launched the investigation of the company's chairman after receiving a tip-off that he might have avoided paying personal income taxes over the past decade, Caijing magazine reported yesterday.
Zong Qinghou
The probe, which started in August, has made substantial progress and is nearly finished, the report said.
The State Administration of Taxation and the Hangzhou taxation bureau are discussing how to deal with the allegedly overdue tax payment.
The Caijing report said the entrepreneur had paid more than 200 million yuan in arrears taxes in October, after the investigation kicked off, but still owes millions more.
Both Zong and the Wahaha Group's spokesperson declined to comment yesterday, while a press officer of the State Administration of Taxation said he was not aware of the issue.
People found guilty of evading more than 100,000 yuan worth of taxes - if that amount comes to more than 30 percent of their total tax bill - could face up to seven years in prison and fines of up to five times the value of the unpaid taxes.
Zong, a 63-year-old native of Zhejiang, was China's 23rd-richest man and the world's 840th richest last year, according to Forbes magazine last year.
His Wahaha Group, the nation's largest beverage maker, formed a partnership with French food and dairy giant Danone Groupe SA in 1996, but last year the pair became embroiled in a dispute over the ownership of the Wahaha brand and other businesses not included in the joint venture.
They are still searching for a solution.
Danone, which has 39 joint ventures with Wahaha, paid Zong $71 million in service fees and share dividends between 1996 and 2006, Caijing reported, citing bank transactions between Danone and Zong.
The money was delivered to the Hong Kong-registered accounts of Zong; his wife, Shi Youzhen; his daughter, Zong Fuli; and the former Party secretary of Wahaha, Du Jianying - all at the entrepreneur's request, the magazine said.
In a public letter delivered after Wahaha and Danone's dispute was exposed, Zong claimed he was the "cheapest CEO in history" after earning a salary of 3,000 euros ($4,700), 100,000 euros worth of annual allowances and a bonus worth 1 percent of the annual profit of the joint ventures.
That amounted to about 70 million yuan of income every year.
"The investigation showed that he earned far more than this and hasn't fully reported the tax for years," the magazine cited an investigator as saying.

Zong Qinghou

From Wikipedia,

Zong Qinghou (宗慶後), born 1945, is a Chinese entrepreneur, founder, Chairman and CEO of the Hangzhou Wahaha Group, the leading beverage company in China[1]. Ranked China’s 23rd-richest man[2] and 840th in the world[3] by Forbes, Hurun Report estimated him to have personal wealth of US$1 billion in 2006[4].
Zong is a delegate to the Chinese National People's Congress.

[edit] BiographyZong is a native of Zhejiang, and has had little formal education. After graduating from secondary school, Zong worked at the Zhoushan salt farm. He returned home in 1979 on the retirement of his mother, who was a teacher[5]. He eventually returned to Hangzhou, and only found menial work at a local school due to the low level of his education. In 1987, he targeted a minigrocery in a school in Shangcheng district[5]，Hangzhou, selling milk. Zong headed the embryonic Wahaha business, which distributed fizzy soft drinks, ice and stationery[5]. Together with two retired schoolteachers, he borrowed the sum of CNY 140,000, to start producing milk drinks for distribution.

He obtained independence from an early government partner by stressing his links with Danone[6]. With his autocratic style[6] and workaholic ethic, he built Wahaha into the largest beverage manufacturer in the People's Republic of China[4].
The joint venture WHH entered into with Groupe Danone, involved the inward investment of US$70 million in five WHH companies[1]in exchange for 51% Groupe DANONE ownership in each company. The trademark agreement signed on 29, 1996 gave the JVs the exclusive rights of production, distribution and sales of products under the Wahaha brand[7]. Collaboration has grown into 39 joint venture entities by 2007[4].

In 2007, the relationship had started to turn sour when Danone attempted to gain control of the company. Zong, who had been left to manage the business without any intervention from Danone, resigned as Chairman of the joint ventures on June 5, 2007[8].

[edit] PersonalHis wife is Shi Youzhen (施幼珍), and his daughter is Zong Fuli (宗馥莉). Shi is the Purchasing Manager at Wahaha[6].