The lawsuit over the inheritance dispute among the Zong siblings has been exposed! The court ordered: defendants including Zong Fuli must explain the whereabouts of the HSBC account with 1.085 million USD! Previously, the lawyer revealed that the account balance is approximately 1.8 billion USD

On July 15, three individuals claiming to be the "children" of Wahaha founder Zong Qinghou filed a lawsuit in the Hong Kong High Court, with the defendants being Zong Qinghou's daughter Zong Fuli and her offshore company.

The plaintiffs stated that they had submitted the complaint as early as December 2024 and applied for a temporary injunction against Zong Fuli to prevent her from disposing of the offshore company's assets. The court has issued a temporary restraining order requiring Zong Fuli to fulfill multiple disclosure obligations.

More than a year after Zong Qinghou's passing, the hidden family secrets and inheritance disputes are surfacing with intense confrontations.

Recently, three individuals claiming to be the "children" of Wahaha founder Zong Qinghou filed a lawsuit against the current chairperson, Zong Fuli, drawing widespread attention.

On July 15, a reporter from the Daily Economic News learned from the Hong Kong High Court about a lawsuit with the aforementioned three "children" as plaintiffs and Zong Fuli and Jian Hao Ventures Limited as defendants.

The document shows that in December 2024, Zong Jichang, Zong Jieli, and Zong Jisheng applied to the Hong Kong High Court for a temporary injunction against Zong Fuli to prevent her from disposing of, handling, or reducing the value of assets held in an account opened in the name of Jian Hao Ventures Limited at HSBC. After reviewing the originating summons, confirmations from the plaintiffs and their lawyers, and other evidence, the court issued a temporary restraining order to the two defendants.

On the evening of July 15, a reporter from the Daily Economic News called the law firm representing the plaintiffs and sent interview questions. The staff stated that they needed to consult with the lawyer before responding to the reporter via email. As of the time of publication on July 16, no response had been received.

The Court Has Issued a Temporary Restraining Order

On July 15, a reporter from the Daily Economic News obtained the original complaint from the plaintiffs Zong Jichang and others from the Hong Kong High Court.

Original complaint from the plaintiffs Zong Jichang and others. Source: Obtained by the reporter from the Hong Kong High Court.

The legal document shows that the plaintiffs are Jacky Zong (Zong Jichang), Jessie Jiele Zong (Zong Jieli), and Jerry Jisheng Zong (Zong Jisheng), while the defendants are Kelly Fuli Zong (Zong Fuli) (first defendant) and Jian Hao Ventures Limited (second defendant, a company registered in the British Virgin Islands).

Image source: Hong Kong High Court official website

Reporters noted that this case is a legal procedure initiated by a writ of summons.

According to the public judicial interpretation of the Hong Kong judicial system, generally speaking, if the parties to the litigation only request the court to make a decision on certain legal disputes or the interpretation of certain terms in legal documents, but there is no dispute (or only minor disputes) regarding the facts of the case, then the litigation is suitable to be initiated by a writ of summons.

(Note: If the litigation is initiated by a writ of summons, but the court finds that there is considerable factual dispute, it can issue an order regarding the legal procedure that the litigation should follow, making the litigation proceed as if it had started with a summons. In such cases, the court will provide instructions applicable to the legal procedures for summons.)

The reporter from "Daily Economic News" has summarized this complaint and found that the following four important pieces of information are worth noting:

First, the plaintiffs, Zong Jichang and two others, had already submitted the complaint to the Hong Kong High Court on December 30, 2024. At that time, it was only half a year after the death of Zong Qinghou, indicating that this family conflict had already occurred.

Second, after reviewing the writ of summons, the plaintiffs' and lawyers' confirmations, and the plaintiffs' commitments, the court issued a temporary injunction. One of the confirmations was made by Zong Jichang on December 29, 2024, along with relevant evidence.

The temporary injunction requires Zong Fuli and Jian Hao Ventures Limited not to dispose of, handle, or reduce any assets in the account opened in the name of the second defendant Jian Hao Ventures Limited at HSBC in Hong Kong, either by themselves or through agents, nor to dispose of or reduce any substitute or traceable income of any assets stored in that HSBC account since February 2, 2024.

Content related to the temporary injunction. Image source: Reporter obtained from the Hong Kong High Court.

The founder of Wahaha, Zong Qinghou, passed away in February 2024.

In other words, Zong Fuli's rights to use the assets of the offshore account Jian Hao Ventures Limited under HSBC in Hong Kong were once "frozen."

Third, the "Zong siblings" also requested Zong Fuli to fulfill four notification obligations within seven days and have received the court's support, including:

The latest balance at HSBC in Hong Kong;

If the assets in the HSBC account were disposed of or transferred to a third party on or after February 2, 2024, an explanation of the whereabouts of those assets, the location of the assets or their substitutes/traceable income, and to whom those assets were disposed of or transferred, under what circumstances they were disposed of or transferred from the HSBC account;

Regarding the approximately USD 1.085 million (USD 1,085,120, hereinafter referred to as "the amount") that was shown to have been transferred out of the HSBC account as of the bank statement dated May 31, 2024, the status of that amount or its substitutes/traceable income, how that amount was disposed of or transferred out of the HSBC account, and under what circumstances, To whom, to where, and under what circumstances the amount should be disposed of or transferred;

A detailed description of the flow, income, and expenditure of assets in the HSBC account from February 2, 2024, to the present.

However, the document also indicates that the first defendant and the second defendant can apply to the court at any time to change or lift the temporary injunction, but must first notify the plaintiff's lawyer.

Fourth, the aforementioned injunction is based on Section 21M of the Hong Kong High Court Ordinance (Chapter 4), to assist the plaintiff in the lawsuit against Zong Fuli (the first defendant, with the second defendant Jian Hao Ventures Limited listed as a third party) in the Hangzhou Intermediate People's Court.

The reporter reviewed Section 21M of the Hong Kong High Court Ordinance (Chapter 4), which is titled "Temporary Assistance in the Absence of Substantive Legal Proceedings."

Who controls the trust account of the second defendant?

What is Jian Hao Ventures Limited?

A reporter from the Daily Economic News found that a lawyer from a law firm in Hong Kong displayed information about representing the above case on their official website, stating that this case is "an injunction and accompanying disclosure application arising from a trust dispute among members of high-net-worth families in mainland China." The case number matches the one obtained by the reporter from the Hong Kong High Court.

Image source: Screenshot from the lawyer's personal webpage

From the lawyer's statement, it can be seen that the trust dispute is regarded as the key term of the case. This also clarifies the identity of Jian Hao Ventures Limited, which is a key party in the offshore trust.

According to reports from several media outlets, Zong Qinghou established an offshore family trust in Hong Kong for his descendants, totaling 2.1 billion USD. The plaintiff's lawyer had previously disclosed to the media that as of early 2024, the balance of the HSBC account was approximately 1.8 billion USD.

Teng Yun, founder and managing partner of Shanghai Xianyun Law Firm, analyzed in an interview with the Daily Economic News on July 16, "If the offshore trust's bank account can be transferred by Zong Fuli under her personal instructions, then this trust may be in a state of not yet being effective (for example, the trust document stipulates that the trust property needs to accumulate to 2.1 billion USD to become effective). Another possibility is that Jian Hao Ventures Limited, which can be utilized by Zong Fuli, although it is a company controlled by the offshore trust, may still operate independently, allowing it to freely allocate funds under its name, and the dividends generated from the company's operations can be distributed among shareholders, meaning that the corresponding shareholder dividends still belong to the offshore trust, which are then distributed by the trustee of the offshore trust according to the wishes of the trustor and the trust document." Teng Yun believes that the trust fund may lack written documentation, making it impossible to confirm whether Zong Jichang, Zong Jieli, and Zong Jisheng are beneficiaries of the offshore trust. Furthermore, if the trust assets can be directly transferred by Zong Fuli, it implies that the trust assets are not truly isolated, raising questions about the validity of this offshore trust.

The plaintiffs Zong Jichang, Zong Jieli, and Zong Jisheng listed Jian Hao Ventures Limited as the second defendant for two possible reasons, according to Teng Yun. First, to prevent Zong Fuli from disposing of the assets of Jian Hao Ventures Limited. Second, Zong Fuli may hold a position such as a director in Jian Hao Ventures Limited, which would allow the company to transfer funds according to Zong Fuli's instructions.

In addition, Teng Yun pointed out several issues worth noting: If the account of Jian Hao Ventures Limited is a family trust account, is the source of funds legal? China has strict foreign exchange controls; is the source of this USD 1.8 billion legal and compliant? Does it belong to Zong Qinghou's personally disposable assets?

Lawyer: The focus of the case includes bloodline identification and the validity of the will

According to reports from multiple media outlets, the three Zong siblings have sued in the Hong Kong High Court to "retrieve trust funds" and have also filed a lawsuit in the Hangzhou Intermediate People's Court to confirm their inheritance rights to the 29.4% equity stake in Wahaha Group held by their father, Zong Qinghou. There are also claims that Zong Qinghou's will, established during his lifetime, names Zong Fuli as the sole heir.

Chen Liya, a senior partner at Zhi Gao Law Firm and director of the Zhi Gao Family Office Special Committee and Zhi Gao Wealth Inheritance Center, told the Daily Economic News that the focus of the case has two main points: first, whether the three plaintiffs can be recognized by the court as the biological children of Zong Qinghou, which is a prerequisite for their inheritance rights; second, whether the will presented by Zong Fuli can be confirmed as valid by the court. When the testator Zong Qinghou established the will, was he in good health and of sound mind? "In practice, to prevent future disputes over the will, lawyers usually advise that elderly individuals over 70 years old should seek a judicial appraisal from a qualified institution to confirm their mental clarity and that they are fully capable of civil conduct before making a will. At the same time, the will should be reviewed to ensure it meets the legal formal requirements; the witnesses to the will should also meet the legal criteria for witnesses."

Returning to the offshore trust as an overseas family trust, its functions include risk isolation, wealth inheritance, and tax planning. When the trustor places their legal assets into the trust account, even if the trustor faces debts, marital risks, or other risks, the trust assets will not be affected.

"Trust assets have independence, meaning they are independent of the characteristics of the trustor, trustee, and trust beneficiaries. The trustor designates the beneficiaries of the assets, and the trustee distributes to the beneficiaries according to the trustor's wishes," Chen Liya said. Trust assets are also a compliant tax planning tool, "If several billion yuan in assets are inherited as an estate, the estate tax could amount to hundreds of millions." "But now it seems that although Zong Qinghou established a family trust, it has led to disputes among his descendants after his passing. Not to mention whether there are flaws in the family trust, it objectively neglects the inheritance of the family's spiritual wealth and the construction of the family governance structure. This not only causes pain to the family and future generations but also has more or less impacted the future development of the enterprise."

"Many entrepreneurs have worked hard to build wealth, but they do not understand how to protect and pass on that wealth. What they need to protect and inherit is not only material wealth but also spiritual wealth. Entrepreneurs bear family responsibilities, corporate responsibilities, and social responsibilities, which are inseparable and interconnected. The stability of the entrepreneur's small family is related to the stability of the corporate big family," said Chen Liya. "Once the enterprise grows larger, the impact of the entrepreneur's private life is not only confined to the family but will also affect the enterprise. (Emphasizing) family morals is also the responsibility of entrepreneurs; otherwise, they may build a great company but have a poor legacy."

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