Rays Lighting founder Wu Changjiang retried and sentenced to 10 years in prison
Wu Changjiang, once a star entrepreneur and even a lord of his generation, was sentenced to 10 years in prison in the retrial of the case of Laishi Lighting.
After more than six years of detention, the founder of Rays Lighting Wu Changjiang misappropriation of funds, the case of misappropriation of office recently announced the verdict.
On April 29, Huizhou City Intermediate People’s Court of the founder of Rays Lighting Wu Changjiang case after retrial made a verdict, the defendant Wu Changjiang guilty of misappropriation of funds, embezzlement, decided to implement a ten-year prison sentence.
Wu Changjiang was the former legal representative and chairman of the board of directors of Rays Lighting (China) Co. He was arrested on December 4, 2014 for allegedly misappropriating funds and was criminally detained by the Huizhou Municipal Public Security Bureau on December 6 of the same year. With the approval of Huizhou Municipal People’s Procuratorate, he was arrested on January 13, 2015 according to the law. He is now detained in Huizhou City Detention Center.
In 2015, the Huizhou City People’s Procuratorate filed a public prosecution on the case to the Huizhou City Intermediate People’s Court, charging the defendant Wu Changjiang with the crimes of misappropriation of funds and misappropriation of office.
After a public hearing by the Huizhou Intermediate People’s Court, a first instance verdict was handed down on December 13, 2016, in which Wu Changjiang was sentenced to 14 years in prison, confiscated property of RMB 500,000, and ordered to refund RMB 3.7 million to Chongqing Rays Lighting Co.
On August 31, 2018, the Guangdong High People’s Court ruled that the first trial verdict was factually unclear and the evidence was insufficient, revoked the first trial verdict of 14 years’ imprisonment for Wu Changjiang, and sent the case back for retrial.
The sentence was pronounced after the retrial, and the decision was made to execute a ten-year prison sentence.
On April 29 this year, the Huizhou Intermediate People’s Court retried the case and issued the following verdict.
First, the defendant Wu Changjiang guilty of misappropriation of funds, sentenced to seven years of imprisonment; guilty of misappropriation of office, sentenced to five years and six months of imprisonment and confiscated property of RMB 500,000; the total sentence of 12 years and six months of imprisonment and confiscated property of RMB 500,000; decided to execute ten years of imprisonment and confiscated property of RMB 500,000 (the sentence is calculated from the date of execution of the judgment. The sentence shall be calculated from the date of execution of the judgment. If the defendant is detained before the execution of the judgment, one day of detention shall be credited to one day of the sentence, i.e., from December 4, 2014 to December 3, 2024).
Second, the defendant Chen Yan (former assistant to the former chairman of Rays Lighting (China) Co., Ltd.) guilty of misappropriation of funds, sentenced to three years of imprisonment, suspended for three years (the probationary period, calculated from the date of the verdict).
Third, the defendant Wu Changjiang was ordered to refund RMB 556,523,000 to the victim unit Rays Lighting (China) Co., Ltd; refund RMB 3.7 million to the victim unit Chongqing Rays Lighting Co.
However, according to public media reports, Wu Changjiang is still not convinced by the verdict, has said to appeal.
The family of 2.9 billion was forced to resign
Leishi Lighting had a famous shareholding battle in Chinese business history. Wu Changjiang, representing local entrepreneurs, founded Leishi Lighting and made it the leading lighting company in China, but did not respect the board’s resolution and underestimated the power of capital. In the rivalry with foreign investors Schneider and Softbank SAIF, Wu Changjiang gradually lost his majority stake and was cleaned out by Wang Donglei. The media have called it “the fall of the kingpin”.
In the 2010 Forbes China Rich List, Wu was ranked 390th with a wealth of 2.9 billion yuan.
In 1988, Wu Changjiang founded the lighting appliance enterprise “Leishi Lighting” in Huizhou. He found two high school classmates, Du Gang and Hu Yonghong, who contributed 450,000 yuan, and Du and Hu each contributed 275,000 yuan. The three divided the work, Wu Changjiang is responsible for factory management, Du Gang as chairman, Hu Yonghong is in charge of sales.
Hu Yonghong did 10 years of marketing in the rainbow appliances, for Rays Lighting created a “home appliance monopoly” model, so that the brand from the small factory stand out. 1998 is China’s “first year of real estate”, Rays Lighting sales reached 30 million yuan, in 2002, more than 100 million yuan. In 2002, the sales exceeded 100 million yuan, and in 2005, more than 700 million yuan. In 2004, Rays Lighting has been among China’s leading lighting, Wu Changjiang also became the industry’s top ten outstanding people.
“I am the most valuable asset of Rays. Why does Rays develop so fast? How to do more than ten years to achieve the first in China? I definitely have something to offer, it is not blowing.” Many years later, Wu Changjiang told the media so.
But Wu Changjiang and Du, Hu business philosophy does not match. Wu Changjiang was in favor of spending big money to do big things, investing the profits back into the production and operation of the company, and playing the slogan of “creating a world brand and competing for the first place in the industry”; Du and Hu, however, wanted to pay more dividends and keep the money in their pockets. Because of this reason, Wu Changjiang take 80 million yuan to leave, clear all the equity. This is his first time out.
In Rays Lighting, Wu Changjiang vigorously cultivate the power of distributors, they have also become Wu Changjiang’s strong supporters. More than 200 dealers held a meeting at the headquarters of Rays Lighting, pushing Wu Changjiang back into the company. Eventually Du and Hu were out, but Wu had to come up with 80 million yuan each to pay the two. In order to raise money, he introduced Softbank SAIF, Goldman Sachs, Schneider Electric and other investors, their own equity began to be diluted.
In May 2010, Rays Lighting was listed on the Hong Kong Stock Exchange, and while the economic crisis broke out in 2011, Rays Lighting’s performance grew by 25% to $590 million, making it the best performer on the Stock Exchange for two consecutive years. At the same time, Wu Changjiang’s shareholding was only 15.33%, while Yan Yan of Softbank SAIF was in charge of 18.48%.
Wu Changjiang, who is a private entrepreneur, and Yan Yan, who has a returnee background, have huge contradictions in terms of hiring and business philosophy. Yan Yan wanted to introduce the modern enterprise system into Rays, while Wu Changjiang was used to dictatorship and believed that Rays needed to do business according to the current reality in China.
The conflict between the two began to erupt. Here is an example, once, Wu Changjiang appointed a vice president without the consent of the board of directors, and the vice president’s life style was quite uncomfortable for Yan Yan, but Wu Changjiang did not care, “As long as they are talented and loyal, they will be reused. I can restrict him in those bad aspects. What we talk about between brothers is credit.”
Wu Changjiang’s mandatory appointment angered Yan, and at a board meeting, in front of all directors and vice presidents, Yan began to reprimand Wu Changjiang for “not abiding by the provisions of the contract.” Wu Changjiang jumped up violently and accused Yan in return. In Wu Changjiang’s view, things could all be talked about in private, “but he accused me in front of so many brothers and didn’t give me face, so if I don’t get angry, how can I mix in front of my brothers in the future?”
In mid-May 2012, Yan Yan, the chairman of Softbank SAIF, suddenly received a call from Wu Changjiang, saying that he was involved in the case. Yan Yan made a decision to ask Wu Changjiang to resign. Yan Yan thought the whole investment process was disappointing, “After I invested in it, I realized that he (Wu Changjiang) took the company’s money to gamble. I was particularly shocked when I found out and talked to him, hoping he would not gamble, and the bottom line was that he could not use the company’s money to gamble.
A few days later, Rays Lighting announced to the public that Wu Changjiang resigned from all positions for personal reasons, and Yan Yan took over as chairman and Schneider executive Zhang Kaipeng took over as CEO.
Soon after, Wu Changjiang cried to the media that he was forced by Yan Yan to leave Leishi Lighting. Capital gained an inch and expelled the founder, foreign capital and investors joined hands to take possession of the national brand, and Yan Yan was a barbarian at the door of industry.
At the white-hot stage of the struggle between the two sides, Liu Qiangdong, CEO of Jingdong, also joined the battle to support Wu Changjiang, claiming that Yan Yan openly lied and violated the professional ethics of investors, and that Laishi Lighting would be collapsed by Yan.
Both sides started to meet each other with white knives. Yan Yan expelled Wu Changjiang from the board of directors, while Wu Changjiang mobilized the employees of Laishi Lighting to start a huge strike, and the suppliers threatened to register a new brand to “start a new business”. At this critical moment, Wang Donglei, who was once the “white knight”, appeared and ended Wu Changjiang and Yan Yan’s 6-year “marriage”.
Wu found Wang Donglei and hoped the latter would help him to drive Yan away. Wang Donglei runs Dehaorunda, which produces western-style small home appliances, and was helped by Wu Changjiang when it was difficult to operate. According to China Entrepreneur, Wang Donglei convinced Schneider to temporarily keep Wu Changjiang’s CEO position.
Wang Donglei is not an ordinary person. His Dehauerunda bought 18.6% of Rays Lighting and acquired equity in the secondary market, becoming the largest shareholder of Rays Lighting. At the same time, Wu Changjiang has also become the second largest shareholder of BDO.
However, the seeds of conflict between Wu and Wang were sown. Wu Changjiang does not pay attention to the board of directors’ resolutions, in the company relocated headquarters, the acquisition of enterprises, laying off the seniors on the preemptive. 2014 he again crossed the board of directors, to three enterprises to grant Rays Lighting brand rights.
In August of that year, Wang Donglei finally blasted Wu Changjiang, playing a recording of Wu suspected of being involved in gambling and debt collection to the media. Wu claimed that he “had not been to a casino for more than 2 years” and that the recording was faked, taking advantage of his past mistakes. Yan Yan also told the media that Wu Changjiang had “gambled away all the company’s money”.
Wang Donglei’s measures were more effective than the first two forced. In his capacity as chairman and CEO of Rays Lighting, he sent an email to tell employees that Wu Changjiang was suspected of privately licensing the company’s brand, transferring benefits, misappropriating and defrauding the company’s funds. The company’s board of directors removed Wu Changjiang from his position. According to Southern People Weekly, Wang Donglei’s side also broke into Wu Changjiang’s office and demanded that he hand over the company’s official seal and business license. The two sides fought, which was dubbed by the media as “Laishi staged a full-scale martial arts act”.
On August 8, 2014, the board of directors of Rays Lighting issued an announcement to remove Wu Changjiang as chief executive officer. Since then, Wu Changjiang through his personal certification microblogging and other channels to release statements, disobeying the board of directors’ resolution, and declared that he would sue Wang Donglei.
When Wang Donglei led a team of more than 60 people to Wu Changjiang for the handover, Wu refused to hand over the business license, business information and financial seal belonging to the CEO in charge, which eventually led to a clash between the two parties’ entourage, in which Wu’s assistant and driver were beaten and sent to hospital with serious injuries.
In Wu Changjiang’s view, the root cause of the beating was Wang Donglei’s attempt to transfer the core light source products of Leishi Lighting to its control of Dehao Runda, as the founder of Leishi Lighting, its attempt to stop Wang Donglei led to the conflict incident.
Later, after Wu Changjiang was formally removed from his position as CEO of Rays, Wang Donglei quickly took control of Rays factories in Shanghai, Huizhou and Zhejiang, and on November 3, the Wanzhou base in Chongqing was also taken over.
On December 6, 2014, Wu Changjiang was criminally detained by the Guangdong Huizhou Municipal Public Security Bureau for allegedly misappropriating funds. he was arrested by the Huizhou Municipal People’s Procuratorate on January 13, 2015, and was sentenced to 14 years in prison at first instance by the Huizhou Intermediate People’s Court on December 13, 2016 for the crime of misappropriating funds and misappropriation of office.
In September 2014, before losing his freedom, Wu Changjiang sent out a tweet like this: these days I have been reflecting on myself, causing the current situation today, I am responsible for 80% of the responsibility.
The company he founded has suffered a serious setback in its development, with its market value having fallen from 16 billion yuan to nearly 700 million yuan.
In its heyday, the strength of Rays Lighting into the top five in the global lighting industry, the world’s lighting giants Philips, Osram are Rays Lighting as its main competitors in the world. Wu Changjiang at that time, the impact of the industry’s global top three “world-class enterprise” development blueprint, has long been put on the shelf.
Its main business, the lighting business in China (i.e., Rays Optoelectronics), 70% of the shares, was sold on December 12, 2019, to the U.S. company KKR, known as the “barbarians of Wall Street,” at a price of 5.56 billion yuan, which includes the world-renowned “Rays Lighting “trademark.
Recent Comments