SAIC plans to protect rights against suit

Shanghai Automotive Industry Corp. (SAIC) said it would protect its legitimate rights in defending itself against a lawsuit filed by smaller shareholders of its South Korean unit, Ssangyong Motor Corp., who are seeking one billion won (US$730,000) compensation. Ssangyong’s smaller shareholders accused the company’s former executives, including SAIC President Chen Hong, and SAIC of illegally transferring technologies and leading Ssangyong to bankruptcy protection in January 2009. They alleged that SAIC failed to keep its promise to invest US$1 billion in Ssangyong when the Chinese carmaker bought the South Korean carmaker in 2004. Ssangyong, 51% owned by SAIC, was taken over by the bankruptcy court after the financial crisis triggered a sales slump and a liquidity crisis. SAIC earlier said it would work with all parties, including the government and labor unions to normalize Ssangyong’s operations and help it ride out the recession after the unions rejected its restructuring proposal which included job cuts and cost reduction. (April 2, 2009)