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Chinese beverage giant Wahaha Group confirmed Tuesday they have lodged a lawsuit in Shenyang in northeast China against an executive of Danone, Wahaha's French joint venture partner, who they say was employed by Wahaha's competitors.

Wahaha sources said Qin Peng, China director for Danone Asia, became a director of Shenyang Wahaha Beverage Ltd. in 1996. Since then, Qin Peng has held concurrent posts as director and board chairman in more than 20 companies that were Wahaha's competitors.

Wahaha argued Qin Peng had breached China's corporate law, which stipulates directors shall be loyal to the company and shall not be employed by competitor companies, and damaged Shenyang Wahaha's interests.

Qin Peng has worked as a director or board chairman in Robust, Shanghai Zhengguanghe and other companies. Wahaha said earlier that Danone's purchase of three drinks companies - Robust, Shenzhen Yili and Shanghai Zhengguanghe - violated Danone and Wahaha's non-competition agreements.

Shenyang Lingdong Industrial Development Company -- which holds a 5 percent stake in Shenyang Wahaha -- launched the lawsuit against Qin Peng at the Intermediate People's Court in Shenyang, capital of Liaoning Province.

Wahaha said the court has accepted the case and would hear it soon. The Wahaha-Danone joint venture holds the other 95 percent in Shenyang Wahaha.

Shenyang Lingdong requested the court order Qin Peng to stop acting as director and board chairman in Wahaha's competitors, stop him from acting as a director in Shenyang Wahaha, and order him to turn over his earnings from Wahaha's competitors totaling 3 million yuan to Shenyang Wahaha.

Shenyang Lingdong also demanded 1 million yuan compensation for itself and another 1 million yuan for Wahaha.

Ding Ying, an authorized public relations agent for Danone, told Xinhua on Tuesday that Qin Peng and two other Danone executives that Wahaha plans to sue had not breached company law or damaged the interests of the Danone-Wahaha joint venture.

However, Ding said Zong Qinghou, chairman of Wahaha Group, might have breached company law.

The move was the latest in the dispute between the Chinese drink group and the French giant that first emerged in April but has since taken on a highly public tone.

Wahaha said a week ago that it would sue Emmanuel Faber, who recently replaced Zong Qinghou as chief of Danone and Wahaha's 39 joint ventures, Qin Peng, China director for Danone Asia and Francois Caquelin, a financial director.

Zong Qinghou said he would sue for a total of 1 million yuan (131,000 U.S. dollars).

Wahaha lawyer Liu Xiangwen claimed that the three men were hired by more than 20 counterpart firms of Wahaha-Danone and carried out a series of investment, marketing and management projects for the firms, which are competitors of the joint-venture in the beverage industry.

On June 26, Wahaha said it had decided to "seek justice" after Danone filed lawsuits against it.

Danone, which owns a 51-percent stake in the 39 joint ventures, has accused Wahaha of setting up independent companies and selling products identical to those sold by the joint ventures.

Danone is demanding a 51-percent stake in the non-joint venture companies, which Wahaha Group has rejected.

Danone filed its first lawsuit against Wahaha on May 9 in Stockholm.

On June 4, Danone filed a lawsuit in the Los Angeles-based Superior Court against Ever Maple Trading Ltd. and Hangzhou Hongsheng Beverage Co. Ltd, and two individuals related to the companies.

Ever Maple Trading Ltd. is the controlling shareholder of Hangzhou Hongsheng Beverage, which is the parent company of Hangzhou Wahaha Food and Beverage Sales Co., Danone's joint venture partner in China.

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