The chairman of China's beverage giant, Wahaha, admitted on Tuesday that he is under investigation over an alleged income tax evasion.

"I'm actively cooperating with tax authorities in the checkup," Zong Qinghou told Xinhua in Hangzhou, where Wahaha Group is based.

Zong explained that he paid due taxes and a late fee in the second half of last year after he acknowledged that Wahaha's French partner Danone failed to realize the commitment of paying tax on service fees, bonus and stock earnings for him in Singapore.

Zong and Wahaha have been actively cooperating in the tax investigation, which was launched in November last year, the soft drink producer claimed.

An officer from the taxation bureau of Hangzhou, capital city of Zhejiang Province in the country's east, told Xinhua that the latest media reports that Zong had evaded 300 million yuan (42.9 million dollars) in personal income tax was "unfounded".

The officer, who declined to offer his name, said information about the case will be delivered to the State Administration of Taxation.

Latest media reports said Zong was initially suspected of evading a tax bill of nearly 300 million yuan. Media reports claimed he had paid more than 200 million of that after tax authorities opened their investigation in August, a different start date to the investigations to the one Zong offered.

Wahaha has been locked in a prolonged feud with Danone, which accused Wahaha of setting up independent companies and selling products identical to those sold by their joint ventures. Danone had demanded a 51-percent stake in the non-joint venture companies, which Wahaha rejected.

Since May last year, the two companies have filed numerous complaints and lawsuits against each other under various Chinese and foreign jurisdictions.

In a renewed negotiation in March, Wahaha rejected a tie-up proposed by Danone.

The Shanghai Securities News said in its Tuesday edition that the tax evasion case is a pressure Danone imposed on Wahaha to push the settlement of the commercial dispute.

The newspaper cited a third party person who has connections with the two companies as saying that the person who reported Zong to tax authorities was probably from Danone.

A spokesperson from Danone refused to comment on the issue on Monday, the newspaper said.

(Xinhua News Agency April 16, 2008)