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Huawei's Australian directors get two more years in job

Chinese Technology Company Huawei has reappointed its three Australian board members and revealed it will roll out the board model to other markets.

Board chairman and former admiral John Lord, ex-Victorian premier John Brumby and former foreign minister Alexander Downer will serve for another two-year term until the end of 2015.

Mr. Lord, a former fleet commander of the Australian navy, said he and his fellow board members remained confident of Huawei's security record, brushing aside concerns in Australia and the US about claims of alleged espionage activities.

''All three of us, offering ourselves to be reappointed this time, it is clear demonstration that we are totally comfortable with Huawei and we are proud of the company,'' he told Business Day.

''In fact, we are probably stronger in our enthusiasm for the company as we learn more about it.''

Huawei, the second-biggest vendor of telecom equipment in the world, created its first local board outside China two years ago in Australia as a pilot program to test its local engagement strategy.

The company has been under pressure to lift the veil around its corporate governance and shareholding arrangements amid suspicions over its alleged links with the Chinese government.

The company founder and chief executive, Ren Zhengfei, said local directors were an important part of Huawei's success in Australia. ''Huawei Australia's independent directors have shown how local knowledge and expertise can deliver positive results in the local markets,'' he said.

Mr Lord described the Australian board as a ''complete decision board'', saying it was responsible for crafting the overall business strategy of Huawei Australia.

''We are the first non-executive directors they've had; part of our process is working with them to make sure governance is followed,'' he said.

However, the company's global headquarters still appoints the chief executive of Huawei Australia.

Mr Lord said it was common practice for global companies such as Shell or Toyota to transfer executives around the world to get international experience.

Mr. Lord also revealed the company was on the cusp of rolling out the Australian board governance structure to other markets.

''Huawei has passed on to us that they are committed to expanding the [Australian] board model globally, over the coming year or two,'' he said.

The company has expanded to Europe, the Middle East and Asia but is shunned in countries such as the United States, the largest telecommunication equipment market in the world.

Huawei is also banned from supplying equipment to the national broadband project in Australia.

But it is a major supplier of telecommunication equipment to mobile carriers such as Optus and Vodafone.

The company has embarked on a charm offensive to woo politicians, the media and the public.

Huawei signed its first sports sponsorship deal with the Canberra Raiders in 2012 and has just extended the deal for another season.

The company has also urged Australian suppliers to become part of Huawei's global supply chain, hoping more local businesses will become advocates for it.


UPDATE 1-Short-seller hits China food firm in rare Singapore attack

Short-seller says China Minzhong misled investors about sales

* China Minzhong: taking legal advice, halts trading in shares

* Shares plunge 50 percent (Updates with details of suspension, comment from ChinaMinzhong)

By Rachel Armstrong and Anshuman Daga

SINGAPORE, Aug 26 (Reuters) - Food producer China Minzhong Food Corp Ltd on Monday became the first Singapore-listed Chinese firm to come under attack by a short-seller, which wiped off more than 50 percent of its market value in two hours and triggered a trading halt.

Short-sellers have in recent years targeted Chinese companies listed in Hong Kong, Canada and the United States, citing irregularities, but they have so far avoided any of the 143 China-based firms listed on the Singapore Exchange Ltd .

China Minzhong, which until Monday's share price slump had a market value of around $520 million, was hit after California-based Glaucus Research Group issued a report alleging the company misled investors about sales to its biggest customers.
The report also raised questions over the credibility of China Minzhong's financial performance compared to its peers. Glaucus said they and their associates have a direct or indirect short position in the company.

Travis Seet, China Minzhong's financial controller, told Reuters the company was taking legal advice on how to respond to the report. He declined to make any further comment and trading was halted pending an announcement from the company.

China Minzhong listed in Singapore in 2010 and has attracted several big-name investors, including Singapore sovereign wealth fund GIC which sold its 14.4 percent stake in February to Indofood Sukses Makmur Tbk PT. Indofood had no immediate response to the queries on China Minzhong.

Other large investors include Franklin Templeton Investments Corp, which holds just under 11 percent of the food producer, according to Thomson Reuters data.


Analysts said China Minzhong will struggle to recover from its share price plunge regardless of the veracity of the short-seller's allegations.

"Given the huge damage done already, we believe it will be an up-hill task (especially without GIC's backing now) for the company to re-build confidence," Lim & Tan Securities wrote in a note.

Shares in China Minzhong fell 47.8 percent in two hours of trade before the company requested a trading halt. Nearly 24 million shares were traded, almost ten times the average full day volume traded over the past month.

Four analysts have a 'buy' or 'strong buy' on the stock, Thomson Reuters data shows. China Minzhong is due to release full-year results on Aug. 29.

A number of Chinese companies listed in Singapore ran into accounting problems in 2008 and 2010, denting investor confidence in the stocks, known as S-chips.

The Singapore Exchange has since then taken steps to improve corporate governance of listed companies and after the trading halt, the regulator said it had asked China Minzhong to confirm the company was in compliance with the rules.

China Minzhong is not the only China-based stock targeted by Glaucus this year.

The group, whose research is overseen by former lawyer Soren Aandahl, accused Hong Kong-listed China Metal Recycling Group of fraud in January this year. Hong Kong's securities regulators, has since applied to the courts to have China Metal Recycling liquidated.

Last year, high-profile short seller Muddy Waters attacked Singapore commodity trading firm Olam prompting the company to raise cash as its stock and bond prices tumbled.

Singapore state investor Temasek, stepped in to prop the company, raising its stake to 24 percent from 16 percent. (Additional reporting by Eveline Danubrata and Rujun Shen; Editing by Miral Fahmy)


Edward Lehman雷曼法学博士
Managing Director 董事长

LEHMAN, LEE & XU China Lawyers
Founder of LehmanBrown International Accountants

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