More Fu Ji fraud

The likely scenario being management set up parallel operations and diverting business to them. Disclosure was non-existent. With the number of staff exiting (78%) it must have degenerated into a open joke on the bond and stock holders.

The lesson to be learned here is to shoot first and ask questions later when it comes to mainland China companies. Red flag here was the accounts were not released because CFO was too 'ill'.

A Director (Carlye Tsui) left because she said she couldn't get enough information, but this was at a much much later stage.

What is the heroic SFC doing? .. Sh*t F*ckall Competence

The Fu Ji auditors: CCIF CPA

"

In that statement, Fu Ji said its business was stable and it was confident of increasing its share of the mainland catering market, which it said was growing fast. It called its financial position "solid" and stated profit attributable to shareholders of 250.23 million yuan (HK$284.57 million) for the six-month period.

In the past 12 months, according to a report prepared for Fu Ji's bondholders by accounting firm KPMG and reviewed by this newspaper, the beleaguered caterer has lost its contract to serve food to Intel, its largest corporate client, as well as contracts with Wal-Mart and Taiwanese computer manufacturer Asus. Fu Ji has just 3,000 staff, down from 13,823 in September last year, the report adds.

Fu Ji has also been losing senior staff. The caterer's heads of sales, legal services, human resources, investment and convenience foods resigned in the past year, the report says. Of 15 sales managers who worked for the company a year ago, 14 were gone, KPMG said, while 12 of 19 finance staff also left. The report says mainland courts hearing unspecified cases against Fu Ji have frozen some of the caterer's assets, meaning it cannot sell them.

The report left bondholders fuming. "There is a huge issue here with disclosure. We had no idea any of these problems were happening," one complained.

The SFC declined to comment.

"

Voluntary liquidations. Norstar

Appears that Fu Ji and First Natural aren't the first, but is a start of a trent of net nets going for liquidation and wiping out shareholders. The management seem to escape not just unscathed but with most of the booty.

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Norstar chairman Lilly Huang convinced the High Court to put the firm into provisional liquidation. Norstar had made a wrong-way bet on accumulators and owed 39 million yuan on that contract. It had also been sued by a supplier for 326 million yuan.

However, according to Webb, the company should have had 753 million yuan of spare cash after these liabilities.

Lai has the same court-appointed role at Norstar. Deloitte is now selling the car-parts firm to state-owned Beijing West, which is connected to Norstar's management.

"

HK Free market quotes

HKEx has introduced a new information service whereby real-time basic securities market prices are made generally available on designated websites free of charge to the public (the  Free Prices Website Service ). It is additional to the many market data services currently provided by HKEx-licensed information vendors and aims to meet the basic needs of investors for simple pricing information satisfied at present most probably by free delayed market data.

Fu Ji Food (1175) liquidates voluntarily

Has more assets ($3b) than liabilities ($2.2b) but the only ones emerging ahead in this mess will be the managers.

As typical of mainland companies.

Poor management with ulterior motives:

• An official at Fu Ji's headquarters in Shanghai said: "We think the game of financing is too complicated for us. We just want to quit it by liquidation."
• company was short of cash and had lost many middle managers, who had left to set up operations that compete with Fu Ji's businesses.

Bond holders are Fxked as they have no way of recovering a good proportion of assets as the company would have already been stripped. Bonds are trading at a 75% discount which means stock holders will get nothing but an expensive lesson:

Insolvency: who gets what in Hong Kong

1. Employees
2. Lenders with a claim on the company's assets, such as mortgages on properties
3. Unsecured creditors, usually banks and bondholders
4. Shareholders

A real clue to the shenanigans happening was the resignation of a Director who actually said something useful:

"Carlye Tsui Wai-ling, chief executive of the Hong Kong Institute of Directors, resigned as an independent director of Fu Ji last month. In her letter of resignation, she expressed concern that she could not get information from the company in a timely manner, and cited its delay in issuing its annual results last year"

This is a similar situation to First Natural Foods (1076) voluntary liquidation.

HK/China police border fades

Extradition procedure - stick them on a Sampan and point it North.

"June 4 student leader Zhou Yongjun tried to enter Hong Kong in late September 2008, but he was taken by Hong Kong police to the mainland authorities without any legal procedures.

HK Real estate shenanigans

Available for a lucky buyer: HK$357m: 39 Conduit Road, West Mid-Levels

Developer: Henderson Land Development (0012)

"The developer says the apartment is on the 66th floor, but the building is only 40 storeys high."

"So just what floor is the semiduplex in question actually on? "I can't tell you the answer to that, but we will tell the buyer the unit is on the 66th floor. Our top unit will be on the 88th floor, and the second-highest floor will be the 68th floor," the spokesman said."

GP Nano from IPO to flames in 2 ears

Criminal charges.. where?

Ban on directorships for two former GP Nano executives

The former chairman of defunct GP Nano Technology Group, Fung Chiu, and former executive director Lian En-sheng were banned by the High Court yesterday from being directors of any company for seven and six years respectively. The pair were accused by the Securities and Futures Commission of giving misleading information about transactions involving GP Nano. The company listed in July 2001, but its shares were suspended from trading two years later. It was eventually delisted in June 2005 and wound up three months later. Enoch Yiu

How to strip a company in HK

Let's say you have a company listed on the HKEX and you have voting control and there are numerous family controlled companies on the HKEX.

The 3 simple steps to legally raping the public shareholders:

1. Form a BVI company owned by the chairman

2. Issue warrants/convertible bonds to said BVI company at a STEEP discount, vote in favor of this.

3. PROFIT!!!!

Of course there is no requirement to disclose who really owns the BVI company.

What will the HKEX do? (Sweet FA)

More about how Tack Hsin (0611) company is doing it.

Thickest Choi

Yes, someone really did name himself that. Being "Thick" wasn't enough, he had to be the thickest.

Legacy of Tung Chee Wah's mother tongue language policy in local schools.

Willie wiley robbers in the wild

SCMP...

Willie sells Cordoba stake at a loss
Toh Han Shih
Oct 06, 2009


Willie International Holdings, a Hong Kong-listed firm with a troubled past, has sold a stake in a subsidiary at a loss to a woman indirectly related to Stanley Ho Hung-sun.

On September 30, the company sold a 39.4 per cent stake in its previously fully owned subsidiary Cordoba Homes to Karen Lo Ki-yan for HK$450 million - a 25 per cent discount to Cordoba's net asset value - which resulted in a HK$90 million loss to Willie, the firm said in an announcement to the stock exchange.

Click here to find out more!

Cordoba's assets include residential and commercial properties in Hong Kong, a 20-storey commercial building on the mainland, "a yacht, artwork, paintings and a 10-carat diamond", said the statement.

Willie, which is involved in property investment, securities, money lending and energy, had a net profit of HK$135.75 million in the first half after consecutive losses from 2004 to last year.

Lo is a member of the family that controls the Vitasoy drinks empire and a sister of Sharen Lo, the wife of Lawrence Ho Yau-lung, the son of Stanley Ho.

From February 2005 to March 2008, Lo was vice-chairman of Hong Kong-listed Heritage International Holdings (SEHK: 0412), which has been a shareholder in Willie since 2005 and now holds a 28 per cent stake in the company.

In November 2005, 99.6 per cent of Heritage independent shareholders voted against a plan to buy a property in Mount Kellett Road on The Peak from Lo for HK$73.8 million.

On February 10, 2006, Heritage was fined HK$15,000 by the Securities and Futures Commission for failing to inform the Hong Kong stock exchange about Heritage increasing its stake in Hong Kong-listed 139 Holdings (SEHK: 0139), which is now called GR Vietnam Holdings.

In June 2006, the High Court allowed Fubon Bank (Hong Kong) (SEHK: 0636) to pursue a HK$235 million debt claim against Willie.

In that judgment, Mr Justice Anthony Rogers said Hong Kong's financial reputation and economic well-being were under threat.

In November last year, the SFC fined Willie chairman Henry Chuang Yueheng HK$350,000 for his involvement in the unauthorised withdrawal of more than HK$30 million in client securities held by Chung Nam Securities.

Willie has also conducted transactions with Hong Kong-listed Mascotte Holdings, which owns a 2.8 per cent interest in Willie.

Ex-Ernst & Young partner strips Akai assets

Even the auditors are in bed with the thieves. In a similar situation in the US there would be lynch mobs and blood on the streets, here in HK there is just ghostly silence from the regulators who are acutely aware who feeds them.

E&Y settles with the liquidators for US$400m when their documents were found to be forged. A E&Y partner who was in charge of audit and now chairman of E&Y resigns, obviously spent his time on the audit drinking.

They claimed that David Sun Tak-kei, the independent review partner on the audit from 1991 to 19999, did a mere seven hours of work on Akai's audit in the three years leading up to the company's collapse.

Sun is now Ernst & Young's co-managing partner for the Far East, although he relinquished his other role as chairman for China and Hong Kong on September 30, the day after Ernst & Young's premises were raided by the Commercial Crime Bureau.

Another ex-partner accused of raping Akai by moving it's assets to one of his own companies now settles for US$100m.

The HK police have opened an investigation into E&Y forgery (going by their record this won't amount to much) but hopefully they will open another case into Ho and Grande, not to mention the Akai founder, Ting.

HKEX does what it does best... sweet FA.

SCMP:

Akai saga ends with 'US$100m payout'
Naomi Rovnick
Oct 06, 2009


Almost a decade after the spectacular collapse of Hong Kong electronics conglomerate Akai, the saga has ended with the failed firm's liquidators securing a major moral and financial victory for its creditors.

Hong Kong tycoon Christopher Ho Wing-on and his locally listed company Grande yesterday settled a High Court case brought against them by Akai's liquidators, Borrelli Walsh. The payout exceeded US$100 million, people familiar with the negotiations said.

Borrelli Walsh began suing Ho and Grande for up to US$500 million in late 2007. They claimed Ho conspired with Akai's former chairman James Ting to strip the failed company's assets, so there was nothing left in the business for its creditors. They have also claimed Ting plundered US$800 million from Akai, concealing the thefts with the use of fake bank accounts and fabricated investments. Ho and Grande have denied the claims against them.

On September 23, Borrelli Walsh wrested about US$400 million out of Akai's former accountants, Ernst & Young Hong Kong, which it had accused of audit negligence. The accountant's defence collapsed after the liquidators said the firm had falsified some of its evidence. Hong Kong police are now investigating that claim.

Akai collapsed in 2000 owing more than US$1.1 billion to creditors, including HSBC (SEHK: 0005, announcements, news) and Standard Chartered. When liquidator Cosimo Borrelli took charge of the business in 2001, he found just US$167,000 worth of cash and assets, according to previous court rulings. In the mid-1990s, Akai had more than 100,000 staff and owned brands including America's Singer Sewing Machines, Akai Electric and Sansui.

In November 1999, Ting and Ho injected all of Akai's businesses into Grande, according to multiple court rulings. Akai's shareholders and banks were not told about the deal, which the Hong Kong Stock Exchange has never investigated. EY Hong Kong was alleged to have advised Grande on the transaction.

Ting was imprisoned for false accounting in 2005 but released a year later on appeal, following errors in the prosecution's case.

Grande Holdings now licenses the Akai and Sansui brands to electronics manufacturers, according to its most recent annual report.

The settlement has saved Ho from a potentially embarrassing session in the witness box. He was due to be cross examined by the liquidators' barrister Leslie Kosmin QC.

Last week Ho, through his lawyers, told the court he borrowed HK$500 million for gambling from Sociedade de Turismo e Diversoes de Macau, casino mogul Stanley Ho Hung-sun's holding company. Kosmin said the loan document the Grande boss provided did not look authentic.

In February, Mr Justice William Stone froze Ho's assets to stop him potentially shielding his wealth from the liquidators.

Ho breached the terms of that order by "siphoning" HK$300 million of cash through his family trust, Stone wrote on September 1. Ho then lost control of all his assets, which the judge placed into receivership. With the settlement, this order has been reversed.

Ho, who did not appear in court yesterday, could not be reached for comment. Grande could also not be reached.