A Chinese creditor is pursuing a shareholder of New Zealand water-bottling company One Pure, claiming he owes them a multimillion-dollar debt.

The claim by a Chinese petroleum company, linked to a business deal that turned sour, has led to a “charging order” being placed over a quarter of One Pure’s shares. A charging order prevents property owned by a debtor being sold or disposed of while a creditor pursues a claim.

The amount claimed in this case is $3.25 million.

A 25 per cent shareholding of One Pure belongs to Yongnan Kang, who set up the company 11 years ago but later sold a majority stake to a Christchurch property developer, Jiangping Wang.

Jiangping Wang has also obtained a separate charging order over his co-owner’s stake in the company, seeking a substantially greater amount of $23.7 million.

Court documents detailing civil list proceedings around One Pure show that Yongnan Kang has not shown up for hearings in recent months.

A decision from High Court Justice Mary Peters dated July 5 this year said that Kang’s “whereabouts are unknown and he is not responding to attempts to contact him”.

One Pure has a seafront bottling plant at Awatoto, south of Napier, and draws water from the Heretaunga Plains aquifer under Hawke’s Bay. It exports much of the bottled water to Australia, China and Singapore.

The original charging order was sought by the Guangzhou Dongjiang Petroleum Science and Development Company (GDP) and was first granted by a Chinese court. The New Zealand High Court has since endorsed the Chinese judgment.

Last year, Kang tried unsuccessfully to block the charging order in the New Zealand courts by claiming that it was linked to a commercial contract that involved GDP in the alleged bribery of a former public official in China, a Mr Xu.

Court documents state that Mr Xu introduced Kang to the chief executive of GDP in 2017.

GDP expressed an interest in investing in and possibly buying a stake in One Pure, advancing the equivalent of about $1.7 million to Kang while it carried out due diligence.

Some of the funds in this transaction, which occurred before Wang bought into the company, were to be used for One Pure to sponsor the Canton Golf Team, with which Xu was associated.

One Pure supplied bottled water to the team as part of the sponsorship deal from March 2017 to December 2019.

Kang last year told the Court of Appeal that during 2018 it became apparent that GDP did not intend to go ahead with any investment in One Pure.

GDP also told him it would not bear any of the golf team sponsorship costs, and demanded its money back plus interest, obtaining orders from a court in the Guangdong Province of China.

Kang opposed GDP’s move to enforce the Chinese orders in the New Zealand High Court.

One of his arguments was that the sponsorship deal was a bribery attempt by GDP to please Xu, and in return gain a licence to reopen a petrol station in a busy street near a large school.

Kang argued it would be contrary to New Zealand public policy to enforce a judgment that involved the payment of an alleged bribe to a foreign official.

The Court of Appeal dismissed his case, saying Xu was not an appointed official performing public duties at the time, and the evidence before the New Zealand courts was “equally consistent with Mr Xu providing legitimate assistance such as lawful lobbying”.

That decision left the charging order in place over a number of Kang’s assets, including his 25 per cent stake in One Pure.

Jiangping Wang, who owns the other 75 per cent, then went to the New Zealand High Court trying to have the GDP charging order lifted from One Pure.

Wang claims he is entitled to Kang’s share of the company.

“First, [Wang and One Pure] contend that Mr Kang has no beneficial interest in the One Pure shareholding and that Mr Wang is entitled to have the shareholding transferred to him pursuant to provisions of a shareholders’ agreement between Mr Kang and Mr Wang of November 29, 2018,” Justice Peters said.

“Secondly, they contend that One Pure is prejudiced because the [GDP] charging order imposes a ‘freeze’ on the One Pure shareholding and this is preventing the proper management and performance of the company.”

Justice Peters found that Kang still held a beneficial interest in his One Pure shareholding, and that Wang’s rights under the shareholders’ agreement did not extend to him taking over the quarter-share of the company without paying for it.

Nor was she satisfied that One Pure was “prejudicially affected” by GDP’s charging order.

One Pure's shorefront plant at Awatoto. Photo / Paul Taylor

In a later hearing, however, Justice Peters granted leave for Wang and One Pure to take that part of the dispute to the Court of Appeal.

Johann Strauss, GDP’s counsel, told NZME the notice of appeal had just been filed and no date had been set yet for the Court of Appeal hearing.

Kang set up the company One Pure International in 2012 and sold three-quarters of it to Wang in October 2018, according to Companies Office records.

One Pure has a resource consent to take 405,000 cubic metres a year from a bore accessing the Heretaunga Plains aquifer, but a report by Deloitte for the Ministry of Environment in 2018 estimated that it was taking less than 1 per cent of that.

Majority shareholder Wang also owns the property development company Huadu International, which has been involved in several large projects in the post-quake Christchurch rebuild.

Ric Stevens spent many years working for the former New Zealand Press Association news agency, including as a political reporter at Parliament, before holding senior positions at various daily newspapers. He joined NZME’s Open Justice team in 2022 and is based in Hawke’s Bay.