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The chief executive of Australian Internet firm Uglii has resigned as the corporate watchdog ramps up its investigation into allegations the firm engaged in serious corporate misconduct.
The resignation of Victorian businessman John Knorr came after Fairfax Media recently revealed how he has repeatedly misled investors - including thousands of Victorians - to generate at least $25 million for his struggling online search firm.
Mr Knorr fabricated or grossly exaggerated his claims about Uglii's activities and potential earnings.
Other staff members have also recently resigned from Uglii or related firms, while a former senior staff member has provided Fairfax Media with detailed evidence he has sent the corporate watchdog about Mr Knorr's misconduct.
In the past two months, three serving or former Uglii staff have told Fairfax Media that they have given detailed information to the Australian Securities and Investments Commission about Uglii's corporate misconduct.
It's understood ASIC recently demanded Uglii hand over documents as it expands its investigation into the firm, although ASIC declined to comment on the case.
Among Uglii's shareholders are thousands of unsophisticated investors from the Latrobe Valley and Melbourne, where Uglii has offices. They include pensioners and many small business owners who decided to invest in Uglii after hearing Mr Knorr's claims that it would generate hundreds of millions of dollars in revenue and transform the world's leading economies.
Highly questionable claims about Uglii continue to be made by the firm's representatives.
A lawyer acting on the instructions of Mr Knorr, Stefan Briggs, recently stated in a letter to Fairfax Media that Mr Knorr had struck a significant business partnership with a high-ranking Chinese government official.
Mr Briggs' letter backs up the claims made by Mr Knorr to shareholders late last year, in which Mr Knorr said that Uglii had struck a "deal" with the Chinese government to "roll out" the firm's online marketing system in the Chinese postal service.
In his letter to Fairfax Media, Mr Briggs provides more details about this purported deal, stating that the "deal was reached during a meeting with Mr Knorr and Mr Jin Jinghua [of the]… China State Post Bureau".
However, when Fairfax Media provided Mr Briggs' letter to China Post, it dismissed the claim and threatened to take legal action against Uglii.
China Post corporate office official Kou Jiantang said that "China Post has no joint venture projects with Uglii, nor is China Post currently in any discussions for joint venture projects [with Uglii]".
"China Post reserves the right to pursue legal recourse with respect to Uglii."
Communications giant Nokia has also issued a new statement dismissing Mr Knorr's claims that Nokia has conceded to Uglii that it had breached Uglii's patents. Had such a concession actually been made by Nokia, it may have meant that Uglii would receive a huge pay out from Nokia.
Mr Briggs' legal letter states that Mr Knorr's claims about Nokia are accurate.
But Nokia's head of regulatory affairs Mark Durrant said this claim was not correct.
"Despite our requests to do so, Uglii has never explained how it claims we infringe its patents, but instead attempted to coerce us into a commercial relationship which was of no interest to Nokia," Mr Durrant said.
Uglii chief executive John Knorr has resigned from the Internet search engine company.
Mr Knorr's false claims about Uglii's business dealings with another multinational has separately sparked a fresh legal dispute.
Late last year, global bank HSBC sent Mr Knorr a formal legal letter warning him that his claims of striking a partnership with HSBC were false and misleading. It is understood that Mr Knorr has since replied to HSBC.
However, HSBC continues to dismiss Mr Knorr's claims of a partnership and lawyers from the banking giant are considering whether to take further action against Uglii.
Mr Knorr has had a chequered business career. Two of his firms have recently been the subject of court action initiated by the tax office, which is owed more than $1 million by Knorr-linked firms. One of the firms is in the hands of liquidators, who are investigating the legitimacy of transactions between Uglii companies that may yet prompt more court action.
In 2011, liquidators blamed the collapse of another Uglii-linked firm on Mr Knorr's poor management.
Two years earlier, a firm managed by Mr Knorr was found by the Federal Court to have breached the Corporations Act by unlawfully selling $1.3 million worth of shares.
Fairfax Media has been flooded with complaints about Uglii from former employees, shareholders and creditors.
The letter from Mr Knorr's lawyer, Stefan Briggs, to Fairfax Media states that Mr Knorr is "a man of significant standing and repute in the Traralgon local community and globally because of the Uglii system".
Mr Knorr denies any wrongdoing and has declined to answer detailed questions from Fairfax Media. Instead, he said that Fairfax Media may view company documents, but only if its journalists sign a non-disclosure agreement. This proposition has been rejected by Fairfax Media.
