China`s SAIC faces lawsuit over Ssangyong Motor failure

SEOUL, March 25 (Yonhap) -- Unionized workers at troubled Ssangyong Motor Co.
said Wednesday they plan to sue their Chinese parent, Shanghai Automotive
Industry Corp. (SAIC), for what they call SAIC's mismanagement of the company.
The planned lawsuit, to be filed this week in South Korea, will seek an
unspecified amount in compensation for damages and SAIC's cancellation of its
51-percent stake in Ssangyong, the union said.
Ssangyong entered court receivership last month after it was abandoned by SAIC,
China's largest automaker, amid collapsing sales and dwindling cash reserves.
The South Korean carmaker is required to meet its creditors and a bankruptcy
judge on May 22 to review its plan to turn the company around. If the plan is
deemed unfeasible, the company will be liquidated.
"The lawsuit would allow Ssangyong Motor to fully sever ties with SAIC," said a
union official.
"In addition, we expect the lawsuit to force SAIC to take legal responsibility
for its management failure," the official said.
In a statement, the 5,200-worker union said it has secured enough shares to take
legal action.
The union also accused SAIC of stealing technology from Ssangyong. Last year,
South Korean prosecutors raided Ssangyong's research facilities seeking evidence
of the alleged technology leaks.
On March 11, Lee Dae-soon, an attorney representing the Ssangyong union in the
planned lawsuit, said, "A focal point in the lawsuit will be whether Shanghai
Auto took the technology at an unreasonable price, exploiting its prominent
position."
Officials with Ssangyong's public relations team in Seoul or SAIC were not
immediately available for comment.
Ssangyong is South Korea's first big corporate casualty of the global economic
crisis, which has taken the wind out of demand for new vehicles and tightened
credit conditions.
The carmaker has an annual production capacity of 200,000 vehicles. It posted a
net loss of 709.7 billion won (US$511 million) in 2008 on sales of 2.5 trillion
won, down 20 percent from a year earlier.
Last month, Ssangyong's vehicle sales plummeted 69.4 percent to 2,369 units.
SAIC bought the majority stake in Ssangyong in 2004, marking the first direct
investment by a Chinese company.
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