CHINA: Danone China chief executive in tax probe

Groupe Danone's China chief executive is to be investigated by Shanghai's tax bureau for suspected tax evasion, according to local reports.

This latest investigation adds to a series of tax probes and lawsuits involving the French food giant and its estranged Chinese partner Wahaha.

According to reports from the Shanghai Securities News agency, a probe has already begun against Qin Peng, who has allegedly received around CNY60m (US$8.8m) in remuneration from Danone since 1996.

In a long-running dispute since last April, Danone wants to end its relationship with its Chinese partner "honourably" after it resulted in a schism between the two companies.

Danone has accused Wahaha and its chairman, Zong Qinghou, of establishing parallel manufacturing and distribution of products covered by the joint venture agreement between the two groups.

Danone and Wahaha had set a March deadline for the dispute to be settled, yet the companies have given no indication that they are nearing agreement.

Earlier this month, it was reported in China that Qin had been investigated by authorities in southern China's Guangdong province for suspected tax evasion of more than CNY20m.

Wahaha founder Zong was also investigated in April following information accusing him of tax evasion.

Chinese courts have largely favoured Wahaha in its legal battles with Danone, although a key ruling is scheduled to come early next year from an arbitration panel in Sweden.