NVC Lighting’s internal conflict has escalated in recent weeks, even after the company board voted unanimously for ETI CEO Wang Donglei to take over in early August. The transition after the merger of the two companies has been difficult, with disagreements occasionally erupting into violence.

Conflict between the current and former NVC Lighting management ended in violence for the second time on September 14 when the NVC Lighting board sent managers to stop the factory, located in the Wanzhou district of Chongqing Municipality in southwestern China, from shipping unauthorized products, according to a Nanchong Wang report. At the Wanzhou factory, supporters of former NVC Lighting CEO Wu Changjiang and company managers clashed. NVC Lighting employee Guo Fong sustained injuries during the conflict and was hospitalized. The NVC Lighting board emphasized the factory is a listed company asset, and Wu’s behavior constituted theft of company assets in broad daylight.

NVC Lighting sent managers to the Wanzhou factory  to stop six trucks from shipping lighting products manufactured for sales through abnormal distribution channels. The management staff rushed to the factory entrance to prevent the trucks from leaving the factory, and sought help from police. Wu Changjiang supporters, however, rallied 400 factory workers to physically assault the 20 NVC Lighting staff. NVC Lighting employee Guo was sent to the hospital after being knocked down to the ground. At the same time, Wu’s supporters destroyed two of the four NVC Lighting company-owned cars.

This is the second incident in September when Wu attempted to misappropriate company assets. Earlier this month he was accused of illegally mortgaging RMB 173 million worth of company assets. Police that arrived at the factory, however, did not stop workers from loading trucks up with lighting products.  

The September 14 incident marks the sixth instance the former NVC Lighting CEO has shipped products to distributors to whom he owes gambling debts. The distributors, who lack the finances to pay for the products, are willing to accept them as repayment for Wu’s gambling debts.

Production at the Wanzhou factory was temporarily halted by the board on August 8 when the conflict between former and current NVC Lighting management first broke out as the two sides battled for control of production sites.

According to an August 26 Nanfang City News report, Wu is deeply indebted to LED supply chain manufacturers because of personal gambling debts. Wu usually issues an IOU and takes away the product payment, or goes to distributors for money when the company pays suppliers. When Wu clashed with board members SAIF and Schneider Electric in 2012, he owed distributors between RMB 5 million (US $810,000) and RMB 10 million and analysts estimated his total debts to be close to 300 million Chinese yuan.

Wu admitted his gambling debt was close to RMB 400 million on August 13.

Wu’s shipment of company products to repay personal debts constitutes a theft of company assets and infringes on the rights of shareholders and local workers, the NVC Lighting board said, adding that Wu was fully aware no payment would be provided for the products shipped. In a statement, the board said it supports “normal, legal and orderly management.”

According to the board, the Wanzhou factory is a wholly-owned subsidiary of NVC Lighting, and without board authorization no one has the right to interfere with factory management or embezzle production lines. Meanwhile, production at the Wanzhou factory was reinitiated with legal support.

At the same time, the board believes Wu must be punished for his criminal behavior and asked the Chinese government to take action. If Wu’s illegal shipments continue, conflict will escalate between the current and former management team, and NVC Lighting will be unable to protect the interests of investors and stockholders, the board said, adding that more serious incidents may occur unless action is taken.  

Wu was removed from the NVC Lighting CEO role on August 8. Over 95 percent of shareholders voted to remove Wu from all company positions including the board by August 29. The former CEO no longer holds any positions with NVC Lighting.