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Brilliance China explains replacement of chairman

HONG KONG, June 24 (Reuters) - China's largest minibus maker Brilliance China said on Monday its former chairman had been removed because his concentration of management functions was not in the best interest of shareholders.

Yang, who was replaced by the board last week, had been the chairman, chief executive officer and president of the firm. Brilliance said in a statement that given its joint venture talks with German automaker BMW and its expected production of Zhonghua sedans, the concentration of functions in his hands was not in the best interest of shareholders.

It did not give a detailed explanation of why it believed that was the case.

Brilliance publicly announced on Thursday that he had been replaced by vice chairman Wu Xiaoan, but briefed analysts on the move in a conference call on Wednesday.

Several newspapers reported that Wu had told analysts Yang had been replaced because he had acted inappropriately and made investment decisions contrary to the business direction of the company's controlling shareholder.

Brilliance said in its statement that the allegations in the newspaper reports arose from a misunderstanding.

Trading in Brilliance shares was suspended on Friday pending the clarification announcement, and is expected to resume on Monday.

The stock closed at HK$1.095 on Thursday.

It has lost 17 percent in the past month and 14 percent in the past three months on concern about reports that Yang was being investigated by authorities -- which were repeatedly denied by the company -- and investor frustration over the slow progress of the planned BMW joint venture, which has been awaiting government approval for well over a year.

BMW has received preliminary approval for a joint venture with China's largest minibus maker to make luxury cars in the country, the official People's Daily Web site said on Friday.

However, Brilliance spokeswoman Suo Yan later said she was not aware the venture had been given initial approval.

"The BMW deal is going smoothly and the project will be very promising," she said. "But so far, we haven't seen any endorsements from the government."

(US$1=HK$7.8)