CDC Corporation (CHINA) says the alleged wrongdoing of a former employee does not affect the company's previously announced results, and will not impact the 2005 audit or future financial statements.

The company says it reviewed its expense controls by examining various historical costs incurred by the company, and the process uncovered areas in which recovery actions against former employees may be warranted with an aggregate amount that is not currently expected to exceed US$600,000.

This includes a matter involving a former executive officer of CDC Software, Asia Pacific in which the company has filed suit against the former executive in the High Court of Hong Kong for breach of fiduciary duties as a result of alleged conflicts of interest stemming from an arrangement with a third party and failure to comply with the company's travel and expense policies.

The former executive has denied the allegations and indicated his intention to defend against the suit.

The proceeding is at a preliminary stage and no timetable has yet been set for discovery or trial.

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