Chinese Gree fined $ 91 million over fire-prone home appliances sold in US

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Chinese home appliance maker Gree Electric Appliances of Zhuhai has agreed to pay a fine of $ 91 million to resolve criminal charges involving faulty dehumidifiers sold in the United States, federal prosecutors have said.

Gree Electric Appliances and two of its subsidiaries, Hong Kong Gree Electric Appliances Sales and Gree USA, have failed to notify regulators that the more than 2 million dehumidifiers they sold to US consumers between 2007 and 2013 could overheat and take fire, California prosecutors said Friday. in a press release.

Gree employees, including senior executives, were aware of the flaws in September 2012, but the company continued to sell the devices for at least another six months, the statement said. Gree finally recalled the defective dehumidifiers almost a year after learning of the defects.

Gree Electric Appliances and Gree Hong Kong have reached a deferred prosecution agreement, authorities said, meaning the companies will avoid criminal prosecution, while Gree USA has agreed to plead guilty to willfully failing to disclose information to regulators. on the safety of consumer products. The companies also agreed to compensate victims of fires caused by faulty dehumidifiers.

The defective dehumidifiers, manufactured by Gree Electric Appliances, imported by Gree Hong Kong and sold by Gree USA, have caused 450 fires and caused more than $ 19 million in property damage, according to a notice issued by the United States Product Safety Commission. consumption.

The $ 91 million penalty included a civil penalty of $ 15.45 million that was paid in 2016, authorities said.

The remainder, in the amount of $ 75.75 million, was paid as part of another recent deal between Gree Electric Appliances and U.S. authorities, according to a statement released by the appliance maker on Sunday.

“The problems related to the above agreements all occurred eight years ago and such problems have not recurred after 2013. The amounts involved have been paid in full and would not affect the operations and performance of the business this year, ”Gree said.

Two Gree USA executives are facing criminal charges for their alleged role in failing to report faulty dehumidifiers, US officials have said. They have pleaded not guilty and will be tried in March 2022 in Los Angeles.

Gree, one of the national air conditioner market leaders, reported a 15.66% drop in third-quarter net profit to 6.19 billion yuan ($ 967 million), while revenues fell by 16.5% to 47 billion yuan, according to results released Wednesday. . The company has maintained healthy cash flow this year, with net cash flow from operating activities reaching 6.46 billion yuan in the first nine months, up 113.12% from the previous year. last year.

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Caixinglobal.com is the English-language online news portal for Chinese financial and business media group Caixin. Nikkei has an agreement with the company to exchange items in English.


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