First Natural 1076.hk: the fraud continues

Liquidators still cannot recover property from the former thieving directors. There has been fraud committed, the courts in some regions recognize that fraud has been committed, however there is no property rights and property in plain sight cannot be recovered. The liquidators cannot even get a hearing in Ningbo. What is the bunch of useless cocksuckers in the SFC/HKex doing?

"Since the appointment on 6 January 2009, Mr. Stephen Liu Yiu Keung and Mr. David Yen Ching Wai, the

Provisional Liquidators, have been investigating into the affairs of the Group and have taken all necessary
actions to preserve the assets and to assess the situation of the subsidiaries of the Company in the People’s
Republic of China (the “PRC”). However, without the assistance of the former Directors, Mr. Yeung and Mr.
Yang, who were the legal representatives of the subsidiaries in the PRC, the Provisional Liquidators would
not be able to proceed the same. As such, legal actions have been taken against Mr. Yeung and Mr. Yang in
respective regions in the PRC for the possible damages to the Group resulting from their illegal possessions
of the properties of the subsidiaries in the PRC, including but not limited to, the company chops and statutory
certificates of the subsidiaries in the PRC. The status of the court cases as at the date of this report is as follows:
(i) Fuqing Longyu Food Development Co., Limited (“Fuqing Longyu”)
The Provisional Liquidators were informed by the PRC legal adviser, based on his recent visit to the
Administration of Industry and Commerce in Fuqing (福清市工商行政管理局) (the “Fuqing AIC”) in May
2010 and to the Foreign Trade and Economic Cooperation Bureau in Fuqing (福清市對外貿易經濟合作
局) (“Fuqing FTECB”) in July 2010, that the changes of the board and the legal representative of Fuqing
Longyu have not been effected despite the enforcement notices having been issued to both authorities
by the Fuzhou Intermediate People’s Court (福州市中級人民法院) of Fujian Province, the PRC.
As such, the Provisional Liquidators have written to the Fujian Provincial Department of Foreign Trade
and Economic Cooperation (the “Fujian FTECB”) (福建省對外貿易經濟合作廳), the Hong Kong Economic
and Trade Office in Guangdong of the Government of the Hong Kong Special Administrative Region (the
“HKETO”) (香港特別行政區政府駐粵經濟貿易辦事處) and the Ministry of Commerce of the PRC (中華人
民共和國商務部) informing the difficulties encountered and seeking their assistance in replacing the board
and the legal representative of Fuqing Longyu and are awaiting their replies.
The Provisional Liquidators were informed by the Fujian Branch of Bank of China (“BOC Fujian”)(中國
銀行－福建省分行) in the PRC that the BOC Fujian had obtained a judgment against Fuqing Longyu in
relation to a loan granted to Fuqing Longyu and is taking steps to dispose of certain collaterals to repay
the loan. Since the replacement of the board and the legal representative of Fuqing Longyu has not been
effected by Fuqing AIC, the BOC Fujian has not provided the Provisional Liquidators with the details of the
abovementioned legal action.
(ii) Jia Jing Commercial (Shanghai) Co., Limited (“Jia Jing (Shanghai)”)
After consulting the PRC legal advisers, the Provisional Liquidators are taking appropriate steps to apply
for re-issuance of company chops and statutory certificates of Jia Jing (Shanghai).
(iii) Ningbo Dingwei Food Development Co., Limited (“Ningbo Dingwei”)
First China Technology Limited, a subsidiary of the Company and the immediate holding company of
Ningbo Dingwei, attempted to file a statement of claim with the Ningbo Intermediate People’s Court
of Zhejiang Province (the “Ningbo Court”) (浙江省寧波市中級人民法院) but the filing was denied by the
Ningbo Court. The Provisional Liquidators have been collating further evidence and are taking appropriate
steps to prepare a revised statement of claim to be filed with the Ningbo Court.

Jack Flader

Chaoda 0682 love granting options to themselves

but the shareholders don't..

resolution 5(B) "To grant a general mandate to the board of directors to allot, issue and deal with shares of the Company"

passes by a narrow 1.5% margin. Only a matter of time before this house of card collapses.

Rino

by Muddy Waters saying essentially it's a piece of shit:

Auditor: Frazer Frost (formerly Moore, Stephens Wurth Frazer and Torbet)

• RINO’s FGD sales (60% to 75% of revenue) are much lower than it claims. We found that many of its customer relationships do not exist.
• Chinese regulatory filings show that RINO’s consolidated 2009 revenue was only $11 million, or 94.2% lower than it reported in the US. We show that the Chinese numbers are credible.
• RINO’s accounting has serious flaws that are clear signs of cooked books.
• RINO’s management is draining cash from the company for its own business and personal uses. The management is in flagrant breach of its VIE agreements, which require it to pay income to RINO (as opposed to taking it).
• RINO’s balance sheet has an astonishingly small amount of tangible assets for a manufacturer. Rather, it is filled with low quality “paper” assets that balance out the inflated earnings, and likely hide leakage.
• RINO is not the industry leader it claims to be in the steel sinter FGD system market. Rather, it is an obscure company in a crowded field, and is best known for its failed projects. Its reported margins are two to three times what they really are. Its technology is sub-par.
• We are not sanguine about management “borrowing” $3.2 million to purchase a luxury home in Orange County, CA the day that RINO closed its $100.0 million financing.

Art Textile 0565.hk

This company is listed on the HKEX and primary produces textiles. It attempts to be less affected by the vagarities of commodification by moving to highend textiles. Most of it's products are sold in China. Constant mention is made in it's annual reports about attending textile fairs in Paris but no results of these attendances are forthcoming.

This company showed up in my earlier screens with high cash and a low price/book ratio. The key points were: was the cash really there and how shareholder friendly would the management be in utilizing this cash.

Auditor: Deloitte Touche Tohmatsu

2007 Annual Report:

Cash: HKD$487m

All Debt: $10m

Inventories: $25m

Receivables: $62m (Rev: $645m)

2008: Announces deal to purchase factory/land from "third" parties for HKD$174m. The vendor was conveniently established in 14 August 2006.

2010 Annual Report:

Cash: $480m

Debt: $393m

Inventories: $104m

Rev: $801

Receivables: $230m

In the 3 years of this period, management has purchased properties/equipment from a third party. Revenue has doubled, however inventories and receivables have quadrupled resulting in negative cashflow for the last 2 years.

I am leery of the timing and fit of the purchases made in 2007 as well as the ballooning receivables which I believe are destined to go bad ($20m > 90days overdue).

On the scale of stinkiness this Chinese company rates a putrid.

ChiNext short candidate

End of lockup period plus...

"As of yesterday, 134 companies listed on ChiNext were traded at an average 72.4 times their 2009 earnings, compared to a price-earnings ratio of 38 on the Shenzhen exchange's main board."

Rats jump ship

The entire staff of Grant Thornton in HK jumps over to BDO to avoid the numerous court cases filed against them after one of their former partners Ricardo Dias-Azedo stole clients', friends' and even his relatives' funds. Old Ricardo followed up the act by disappearing.

Ocean Grand, Michael Yip Kim Po convicted

Hopefully gets quietly exported to China to be executed..

"Former Ocean Grand Holdings chairman Michael Yip Kim-po, 49, and five others were convicted yesterday of 15 charges over fake and overly expensive purchase orders for metal-processing machinery.
Also convicted were the one-time fugitive's sister, Yip Wan-fung, 42, project director Yip Wai-lun, 45, and three people appointed as directors of shell companies used in the schemes, Keith Siu Kin-fung, 34, Lau Hok-man, 58, and Tsui Pui-sze, 28.

The convictions came after an 84-day District Court trial that began on July 6 last year and heard evidence from 61 witnesses of a web of transactions involving two schemes and tens of millions of dollars between January 2005 and November 2006.

The six had faced 18 charges but three were laid as alternatives and they were convicted of 15, including conspiracy to defraud, publishing a false statement, theft, dealing with proceeds of an indictable offence and accessing a computer dishonestly. "

Universal Travel Group

UTA is a NYSE listed, Chinese based 'online' travel company. A recent blog article by "Bronte Capital" alleges fraud, highlighting a bogus website, strange ticket collection practices, low staffing costs and other financial oddities. The article is obviously written by a short working (successfully) his book with the stock dropping 25% at one stage.

My initial reaction is that this is another Chinese company fraud. The article as written seems be be by someone with little China experience who is heavily dependent on Chinese contacts for his scuttlebut research and smells heavily of a short starting from a preconceived position. How many of the factors can be attributed to the company's amateurism instead of evil is unanswered, however with the reputation of Chinese companies, investors will have a hair trigger.

This is another in the trend of shorts issuing fraud reports on the myriad of suspicious Chinese companies. Orient Paper was another one of these that may or may not have any foundation but have contributed well to the short's profits.

Barron's on Chinese reverse IPOs in the US

Same old modus operandi as what happens in HK. Companies with 3year records under perform by over 70% - the spruikers have already cut and run.

- False financial statements
- Suspect auditors
- Investment banker/hedge fund assholes too eager to get in early

Beware This Chinese Export
Barron's 8/30
By Bill Alpert and Leslie P. Norton

"These companies fall between the cracks of market regulation. The SEC's enforcement staff can't subpoena evidence of any fraudulent activities in China, and Chinese regulators have little incentive to monitor shares sold only in the U.S."

"The Public Company Accounting Oversight Board, established under the Sarbanes-Oxley Act to police auditors, recently warned against lax auditing of U.S.-listed Chinese businesses. The PCAOB plans to ask Congress to lift restrictions on the disclosure of its disciplinary proceedings against accountants. China is one of several nations that won't let the PCAOB inspect the local auditors used by U.S.-listed companies."

"As the "auditor of auditors," the PCAOB has sounded an alarm over the auditing of overseas businesses. A July 12 practice alert noted with concern that 40 accounting firms with five or fewer partners had rendered opinions on companies with China-based operations."

Sydney Harbour Foreshore Authority

This doesn't compare with the scale of Donald Tsang/Tung Chee Wah's Cyberport deal with Richard Li.

"Andrew Kelly, the second-most senior official at the Sydney Harbour Foreshore Authority."

Nice work if you can get it...

After he left in April 2008, Mr Kelly took up a full-time job in the Middle East with a Kazal-associated company, earning between $200,000 and $385,000 tax-free;"

Kroll Associates

Old but interesting..

"Kroll is a world-wide investigation agency popular with Earth's leading corporations and governments for investigating other people's affairs. For more information on Kroll, visit the Kroll Associates Kroll-Ogara web site (hey, they even get free publicity here). Alternatively you could look at the piece by their Executive Managing Director for Asia, Stephen Vickers, which was published in a recent issue of Time Magazine. Incidentally, we wonder how a Managing Director could ever be non-Executive, but perhaps the more words the better in US titles."

Hontex admits lying

Hontex, another Fujian based company admits lying in the prospectus saying it was all a "misunderstanding".

"Embattled mainland fabric maker Hontex International Holdings, accused by the Securities and Futures Commission of deception and fraud, admitted yesterday to making misleading statements during its December share sale and said it plans to compensate investors."

Meanwhile the auditors are covering themselves in gory as usual:

"In May, KPMG resigned as Hontex's auditor after its staff members were offered cash gifts to cover up discrepancies in the sportswear firm's books. A week earlier, the Independent Commission Against Corruption had charged KPMG senior manager Leung Sze-chit with allegedly taking a HK$300,000 bribe to overlook accounting problems with Hontex's prospectus."

Supposedly, the cash gifts were just token gestures and not bribes.... it was all a misunderstanding?

Gome's Du Juan Freed, SFC helpless

Chinese company listed in HK, insiders rape the company and the SFC is powerless to act.

"The Beijing high court upheld on appeal Wong's 14-year jail sentence for bribery and insider trading handed down in May. But it commuted a three year and six month term given to Du and released her, prosecutors said in a statement.

Wong, known on the mainland as Huang Guangyu, and Du have yet to answer allegations by Hong Kong's Securities and Futures Commission that they perpetrated stock market malpractice resulting in HK$1.6 billion in losses in 2008.

Last August the SFC won a High Court order freezing HK$1.66 billion in Gome shares controlled by Wong and Du. But to date it has been unable to serve a summons on the pair as their whereabouts were unknown.

People with direct knowledge of the case said the regulator cannot send a writ to Du across the border. Meanwhile, Du could send her representative to take part in Gome's special general meeting in the city next month."

China Green 904.HK releases

Going somewhat to reassure investors China Green releases their annual results this morning. Net profit compared to last year rose 25%. The stock jumps 25% as well.

Interesting tidbit about the auditors:

"CCIF CPA Limited (“CCIF”) has merged their business with PCP CPA Limited resulting
in Crowe Horwath (HK) CPA Limited (“Crowe Horwath”) operating as the merged firm
from 13 October 2009. "

China Green - Another Fujian fubar

Delays annual results announcement - by not showing up for a prearranged meeting with the analysts (Auditors need more time). Follows up with a filing with the HKEX stating they don't know why the stock is crashing and burning.

Questions being raised about them overpaying for land leases in the Fujian province and being compared to Enron about how, except for 2009, overly consistent their past earnings have been. Stock was down 45% at one stage.

Their investors will be staring down the abyss...

New Filipino national monument

Gotta love the Filipinos...

Intel acquires McAfee..

McAfee shareholders are still rejoicing with this early Christmas present from Otellini - the book will be a bestseller, "How we head faked the idiots from Intel"

“(1) As if governed by Newton's First Law of Motion, an institution will resist any change in its current direction; (2) Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds; (3) Any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops; and (4) The behavior of peer companies, whether they are expanding, acquiring, setting executive compensation or whatever, will be mindlessly imitated. Institutional dynamics, not venality or stupidity, set businesses on these courses, which are too often misguided.” - Buffett

Chaoda'd again

Mr Ho never ceases to deliver (USD$350m capital raise)..

Chinese frauds making waves in NZ

The two men are close business associates. Mr Tang manages Mr Chen's charity, and also acts as a spokesman for Mr Chen, who is notoriously media shy.

Last month, it was revealed that Mr Tang may have misled the public about his qualifications.

The former head of Microsoft in China has claimed to have a PhD from the California Institute of Technology.

He has since admitted that is wrong, and that his PhD is from another American institute - which turns out to have been closed down for being an unregistered "diploma mill", which sold degrees.

Mr Tang, who has also been accused of falsely claiming to have registered two patents, responded to the scandal by telling the Beijing News: "Losers cheat some people and get caught. Winners cheat the whole world all the time."

Some honesty please...

China mobs Taizinai

So some asshole of a manager in China has raped company funds to pay off the officials, nurture his harem of mistresses, employ his moronic sons and generally make happy. What avenues do you have in recovering the cash? The judges/officials have been bought and are more likely to throw YOU into jail, the auditors are hiding, the manager has disappeared. In China, you buy and send in a mob....

"Its third-largest factory, in Huanggang, Hubei province, is being occupied by a 40-strong mob believed to be employed by a construction company Taizinai owes money to.

The invaders "have now occupied and taken control of the premises of Hubei TZN [Taizinai]", a circular to Taizinai's creditors sent by its liquidator, Borrelli Walsh, and seen by this newspaper said.

The occupiers were still in the factory, a person with direct knowledge of events confirmed.

The general manager of the factory was also detained by the mob for 11 days, the circular to creditors added. He was rescued by government officials "in recent days", the document dated June 2 said."

Stolen in Hainan

A wallet? No, in this case a whole hotel is stolen and a NZ company gets stung. A Cheung Ping Kwong sells the hotel belonging to a joint venture and pockets the money. Going by his name, Cheung is from Hong Kong. Property rights in China?

The December 2009 year annual report noted further legal problems with the Hainan Island hotel. MCK dropped a bombshell on April 12 when it said Cheung had sold the hotel, with other joint venture developments, and pocketed all the money. The loss to the NZ company is about $26.1 million.

....

Chairman Wong Hong Ren and managing director BK Chiu stuttered and stumbled as they explained that a company's seal or chop was the most important feature of a company in China, with its "judicial or legal person". Under Chinese law that person, if he or she has access to the chop, has the power to bind a company without needing any other signature

"Wong and Chiu's tale included threats by criminal thugs, concerns over the safety of the Hainan Island hotel staff and pleas by Wong to the local Communist Party officials."

Sigh,... the officials are the problem.

Another frauditor

To add to the redflag list:

"Four of the firms in this article share the same auditor, Hopkins. Our database shows that it currently has only 6 listed audit clients, including GEG, GGT, MFG and UBS. The other two are Neo Telemedia Ltd (Neo Telemedia, 8167) and Tack Fat Group International Ltd (Tack Fat, 0928), a company we warned the market about twice (in 2005 and 2007) before it collapsed in 2008. It appointed Hopkins on 6-Oct-2009.

Mei Ah Entertainment Group Ltd (MAEG, 0391) owned 3.9% of UBS when it was listed in 2001. In 2007, MAEG was one of three subscribers in a takeover of Neo Telemedia, along with Hanny Holdings Ltd and Hoffman Ma Ho Man, the Deputy Chairman of Success Universe Group Ltd (0487). Hopkins has been auditor of Neo Telemedia since 20-Sep-2005.

Hopkins was also the auditor of Code Agriculture Holdings Ltd (Code Agriculture, 8153) from 15-Jun-2006 to 1-Apr-2009. Code Agriculture was listed as "M21 Technology Limited" on 30-Mar-2001, when it was 29.25% owned by MAEG.

The MD of MAEG, Mr Tong Hing Chi, was an NED of UBS from its IPO until 30-Aug-2005. He was MD of Code Agriculture from its IPO until 31-Oct-2008. He has been Vice Chairman of Neo Telemedia since 1-Mar-2007.

In the past, Hopkins has been auditor of several companies we have written about, including Skyfame Realty (Holdings) Ltd (from 2002 to 28-Sep-2005) and Riverhill Holdings Ltd (from 22-Aug-2003 to 29-Nov-2004). Both companies featured in our "Styland Network" stories of 2002. This was eventually followed by a series of regulatory investigations and actions."

China/HK Fraudsters

CCIF auditors makes another ignominious appearance:

"It also changed its auditors from Hopkins CPA Ltd (Hopkins, formerly Albert Lam & Co) to CCIF CPA Ltd (CCIF), ostensibly because Hopkins was going to carry out an internal control review, although we cannot find any subsequent mention of this review.

The managing director of CCIF is Charles Chan Wai Dune. He and CCIF were recently fined and reprimanded by the HKICPA for a defective audit of UDL Holdings Ltd (the company was not named but we figured it out). CCIF was replaced again as auditor of UBS by Hopkins on 26-Aug-2008. All of the audit reports on UBS since its IPO have been clean."

HSBC chart technical support levels

The current uncertainly requires some superhero support and like clockwork today's chart shows a formation with hero support from.... BATMAN!!!

Unfortunately, the evil HK tycoons have gained the upperhand... which calls for a DOUBLE BATMAN formation!!

Alas, the evil villains have prevailed, but have no fear Don is here. Stay tuned for next week's episode... will HSBC be plundered by a desperate British empire, will the black knight rescue the Euro, will Donald's tongue stick to the red derriere...?

"Sometimes it's only madness that makes us what we are."

David Winters and Jardine

Interesting that David Winters is spruiking Jardines Matheson at it's all time highs, saying one of it's main strengths is "western management" in Asia, inferring something, but nothing good.

Asian Godfathers - Joe Studwell, has this to say...

"If one seeks the worse record of corporate governance in the region over the past thirty years, a serious contender has to be Jardine Matheson, the original white godfather business"

"The Keswick family, who claim to be descended from William Jardine's niece, have treated minority investors in a manner that would make many godfathers blush. In the mid 1980s they created a corporate cross-holding structure within their listed company web that allows the family to run the group despite owning less than 7 per cent of JMH..."

"minority investors,... refer to Jardine's Hong Kong headquarters, with it's distinctive little round windows, as the Tower of a Thousand Arseholes."

HK justice

One year jail for killing someone crossing the road on a zebra crossing.

Judge Kevin Browne: A man with 10 traffic convictions was jailed for a year and banned from driving for three years for knocking down and killing an elderly man walking on a zebra crossing. Wong Wai-hung, 59, who was convicted of dangerous driving causing death after trial, had been fined three days before the crash for using a phone while driving.

However duping young women using superstition into sex gets you 6 years:

Judge Stanley Chan Kwong-chi: had quite a lot more to say about the dangers of superstition when Au Yeung was back in court on January 21 to learn he was off to jail for six years and nine months.

Kingwell (1195) aka Sinotronics makes purchase

Buys 70% of Stephigh which owns 100% of Anlu）for HK$126m. The seller is Mr Hui Lung Hing "Independent party" who purchased the property for RMB21m in July 2008 - a 525% return.

China property bubble - even electronics companies are diving in.

"A gold mine is a hole in the ground with a liar on top.

272 gold companies curently listed on the ASX, of these only 41 have positive cashflow at a time of record high gold prices.

Now who are the terrorists?

"SWAT team breaks into home, fires seven rounds at family's pit bull and corgi (?!) as a seven-year-old looks on.

They found a "small amount" of marijuana, enough for a misdemeanor charge. The parents were then charged with child endangerment."

New Century withdraws Singapore IPO

"Two sources familiar with the deal confirmed a report in the Singapore Business Times on Wednesday that said the Chinese shipbuilder failed to disclose an ongoing legal dispute with a customer that had cancelled an order for two bulk carriers.

The sources declined to be identified because of the sensitivity of the matter.

The two vessels remain on the firm's order books in its initial public offering prospectus, which also said New Century was not involved in any legal proceedings, the paper said, adding a complaint had been made to the Singapore Exchange."

Narcissus Qian

an office worker in Shanghai commenting on the expo. "I see everything related to this event as cheap and lousy."

Interoil

My take on this is that the management are being very very oblique and dishonest with information. The past record of Mulacek lays the roadmap of the future. Probabilities are 95% fraud and the management is threading water. However, 5% chance that there is indeed sustainable gas and they will strike it. Put options payoff about the same as provided by the CDSs before the housing crash.

Interesting article from Sam Atar, former CFO of Crazy Eddie, no doubt an expert at detecting fraud. Not sure if he correctly nails Patrick Byrne (Sith Lord) who has some illustrious pedigree.

"Disclosure: I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes, simply because I could.

If it weren't for the efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.

I do not own Overstock.com securities short or long. My research on Overstock.com and in particular its lying CEO Patrick Byrne is a freebie for securities regulators and the public in order to help me get into heaven, though I doubt that I will ever get there anyway.

I do research on InterOil for Fraud Discovery Institute. However, I do not own any InterOil securities, short or long.

I plan on meeting corporate miscreants, such as fifth rate crooks like Patrick Byrne, in hell. In addition, it is likely that InterOil CEO Phil Mulacek may join Patrick Byrne and me in hell, too. We will all fry together."

Hunan's Taizinai sacks Goldman

Amazing tale of Chinese corporate malfeasance which unfortunately isn't in the minority for Chinese companies. Only thing missing from the story are the mistresses.

Naomi Rovnick in the SCMP:

As Western investments into mainland companies go, Goldman Sachs, Morgan Stanley and UK private equity firm Actis Capital's decision to plough US$73 million into yoghurt drink maker Hunan Taizinai may qualify as one of the worst.

Factories like temples...

"Li's Zhuzhou facility contains several enormous yoghurt factories built in the style of roman temples, clad with marble, with Pantheon-style columns lined up along one wall of each building, two people who have visited said.

The frontage of Li's office headquarters is a near-exact replica of the Gate of Heavenly Peace in Beijing. That building is so vast that the lobby covers around 7,000 square feet. The founder's office, on the floor above, covers 7,000 square feet as well.

Li also erected a life-sized statue of himself in the Zhuzhou grounds, said to be made of solid jade. The price of the statue, which has disappeared from the facility, is unknown. But the ornament is said to have cost HK$130,000 just to transport from Shenzhen, where Li bought it."

Anyone still think they can consistently make money investing in small to midsize China companies?

HK to allow Chinese auditors

Another blow to investors in HK. The HKex/SFC (who knows why they require two different regulators and where the demarcation is) cannot pursue Chinese companies listed in HK already - check out the list of 'liquidations' that have assets mysteriously disappear (First Natural Holdings).
"A proposal to allow mainland companies listed in Hong Kong to be audited by mainland accountants came under fire from legislators yesterday.

Paul Chan Mo-po, who represents the accountancy sector, said the move could hurt local investors' interests. "This could create a problem, if non-Hong Kong auditors fail in their duty and the local regulator could not directly investigate or punish them," he said.

The proposal, expected to be introduced this year, is an extension of a stock-market rule that allows some Hong Kong-listed firms to be audited by overseas accountants."

What are the chances of the HKex/SFC pursuing an incompetent/corrupt auditor in China?..... ZERO. Secretary for Financial Services and the Treasury Chan Ka-keung is either being disingenuous or just plain ignorant to come up with this gem.

"Chan Ka-keung said that the rules were in line with international practices, and that local regulators could work with their counterparts overseas and on the mainland to solve any problems that arose."

Jim Rogers...

5:40 "America cannot quintuple it's debt again, the UK cannot sextuple it's debt again.... they've shot their wad"

Jim Rogers toying with and putting a flame under some analysts..

Surf porn while Rome burns

SEC staff surfed for porn as US economy crashed

Forge Group (FGE) now trading at $3

Meanwhile down in oz..

The FGE management sold out half their holdings at @$2.10 to Clough. Are these dumbwits still 'excited' about "The Strategic Alliance Agreement provides an operational framework to deliver the expected benefits and facilitate long‐term strategic co‐operation between the companies. " ? A whole wordy explosion of airy fairy flatulence.

Clough has 2.11m shares at purchased prices of $2.10 per share and 31% of Forge. At the recent market price of $3 for FGE, Clough is sitting on a $23m profit which is about the same as what Clough has earned for the LAST TEN YEARS IN TOTAL ($27m).

Forge management has effectively handed control over to Clough, a company that has made losses 3 years out of the last 5. The Forge shareholders can now expect to get really forged, no imagination required to guess who will get the meat and who will get boned.

10 hours of labour to afford a pizza

Jizza Hutt workers can enjoy this lovely large pizza for dinner everyday @HK$208 each. They however need to work 10 hours at Jizza Hutt's hourly wage of HK$21.40 (US$2.80). This is the lowest of HK's major fast food chains so the workers will need to put in some overtime.

Jardines Group which now runs Jizza Hutt in HK, has moved on from running opium to selling pizzas to the natives but in their greed for profits they overlook Henry Ford's idea of paying the workers enough to afford their products.

But then, their worker serfs can just settle for the regular sized pizza and break even with only one day's work.

Dumb fuck award goes to Forge Group (FGE) management

For not only accepting but for soliciting an offer from Clough of $2.10/share. The morons not only short change themselves but also shareholders in pursuing their exit strategy.

Independent advisor says offer is "NOT FAIR AND NOT REASONABLE" and estimates values of shares at between $3.74 and $4.13.

Peter Hutchinson, the Management Director is still bound to selling half his shares and options at $2.10, gives control to Clough at below market price and easily qualifies for senior moron status.

The directors who previously okayed the deal now abstain, while one independent advises against accepting.

The $2.10 which FGE management has accepted is :

• a discount of 18.6% to the closing price of Forge Shares of $2.58 on 13 April 2010, the day before the date of this Target’s Statement;

• a discount of 9.09% to the closing price of Forge Shares of $2.31 prior to the Announcement Date;

• a discount of 0.94% to the VWAP of Forge Shares of $2.12 for the 1 month prior to the Announcement Date; and

• a discount of 1.87% to the VWAP of Forge Shares of $2.14 for the 3 months prior to the Announcement Date.

These fuckers must be desperate to exit and this can't be good news for FGE as an ongoing concern.

Name of the day

Buggle Lau Ka-fai, the chief analyst at Midland

Swiss lambs to the slaughter

Swiss franc offerings gratefully received...

"HK, Fujian hold investment seminar

Hong Kong and Fujian have held a seminar in Zurich to encourage Swiss investors to consider business opportunities in the Pan-Pearl River Delta region."

KPMG makes the news with Hontex

Investors in HK/China sure need to dodge a lot of arrows... first from E&Y with Akai and now KPMG.

The ICAC said Leung Sze-chit, a senior manager at KPMG in Hong Kong, offered a HK$100,000 bribe to a subordinate "as a reward for preparing the accountant's report for the global offering of Hontex".

Laughable that the HK Legislator for Financial Services Chim Pui-chung gets into the act by farting "Who is checking things?". The same Chim Pui-chung who has served time in jail for.... fraud. Whose interests would this character have at heart?

Also laughable that there is some activity trying to airbrush history from the Wiki..

"He was also the legislative councillor from 1991 to 1998 until he was jailed for [[Conspiracy (crime)|conspiring]] to forge documents in 1998.[http://legalref.judiciary.gov.hk/lrs/common/ju/ju_body.jsp?DIS=3934 HONG KONG/SAR COURT OF APPEAL] After his release in 1999, he was re-elected unopposed to the legislative councillor in financial services constituency in 2004.[http://www.asiasentinel.com/index.php?option=com_content&task=view&id=1178&Itemid=32 Hong Kong's Bureaucrats and the Stock Exchange]"

YAFF - another Fujian fraud

Only surprise here is the SFC actually doing something.. however the investors can kiss their investments goodbye..The Securities and Futures Commission yesterday ordered the suspension of trading of sportswear fabric maker Hontex International Holdings, just three months after the company listed in Hong Kong.

YAFF - Yet another fujian fraud

SCMP today...

Zijin Mining probed over disclosure breach
Zijin Mining Group (SEHK: 2899), China's largest gold miner and third-largest copper producer, is being investigated by the China Securities Regulatory Commission in relation to "the violation of law and regulations of information disclosure". The company would "closely co-operate" with the Fujian branch of the regulator and "strictly perform" its information disclosure obligations, a statement filed to the Hong Kong stock exchange said. In January, the miner won approval from Australia's Foreign Investment Review Board to proceed with its acquisition of Indophil Resources for HK$3.89 billion. Toh Han Shih

US investors get FUqi'd

The only investors who should be investing in small cap China companies are the ones with insider connections. Investors without these connections are the PATSIES.

Going to see LOTS more of this in the near future.

"Certain accounting errors"...

WTF are they thinking?

Money losing electronics firm decides to diversify by paying a record price (US$85.5k/sqm) for a residential property. The cynical may believe the vendor is not independent...

A listed electronic components manufacturer yesterday bought a house on The Peak for HK$60,215 per square foot, making it the most expensive home in Hong Kong in terms of price per square foot.
Sino-Tech International Holdings said they had agreed to buy house No 8 at Sun Hung Kai Properties (SEHK: 0016)' Severn 8 in Severn Road on The Peak for HK$280 million for investment purposes. The three-storey house has a gross area of 4,650 square feet and offers Victoria Harbour views.

New World again

The most shameless developer in town, greed that can only be tamed at the end of a guillotine.

"Five years ago, New World Development sold about 200 flats to staff and business partners at The Merton in Kennedy Town - a project it developed with the Urban Renewal Authority. The private sale sparked criticism of the way developers go about marketing their projects.



Now similar questions are being raised about another New World-URA project, The Masterpiece in Tsim Sha Tsui. And once again, New World is being accused of manipulating the property market by selling 39 flats to business associates at the beginning of private sales - a practice which lawmakers said was aimed at artificially creating a picture of good sales. At a later stage flats were also sold to the company's top management and their relatives "

Push to extend flat sale curbs to URA partners

Robber barons at work assisted by the Urban Renewal Authority, first rezone commercial areas to residential then profit. New World Development the same barons who bought the Hung Hom Peninsula for well below market and then hired the Permanent Secretary for Housing, Planning and Lands, Leung Chin-man when he retired.

The New World conglomerate's grand-father cheng when asked would he gift his new grand-daughter in law, replied: 'she's getting my grandson, isn't that enough of a gift?'

Class and humility.

"Development minister Carrie Lam Cheng Yuet-ngor yesterday pledged to ask the Urban Renewal Authority to consider extending to its project partners the authority's restrictions on sales to staff.

The pledge came after seven of the first 30 flats of The Masterpiece development in Tsim Sha Tsui were found to have been bought by relatives of New World Development managing director Henry Cheng Kar-shun."

F'king coffe for you?

HK: Insider trading capital

In the meantime the SFC/HKex fatcats are ordering more dimsum. Cold comfort in the fact that it's worse across the border in the wild east.

"The share prices of 20 companies listed on the main board of the Hong Kong stock exchange that announced major transactions between November and January moved much more sharply than the benchmark Hang Seng Index in the two days before they suspended trading ahead of making an official statement."

"That's quite normal in the Hong Kong stock market, especially for third-line or fourth-line stocks," said Ricky Tam Siu-hing, chairman of the Hong Kong Institute of Investors. "A lot of people in the market seem to know the news before the company [announcement] or the general public, so they buy ahead of it."

Shares in one of the companies concerned, Continental Holdings, rose 17.3 per cent over four days. Shares in another, Pearl Oriental Innovation, rose 61 per cent in a week. Shares in Jackin International rose 13.6 per cent in a day. In each case the sharp movements were followed by a suspension of trading and an announcement.

Chinese poisoned beans

The problem is not feeding poisoned food to the populace but the fact that officials lose face when it's publicized..

The discovery in mainland markets of tonnes of beans treated with a highly toxic pesticide has prompted an indignant response from an official responsible for the safety of the produce, despite a public outcry over recent food safety scandals.

One city's decision to publicise the problem was "inconsiderate of friends," said Zhou Qingchong, deputy director of the agriculture bureau law enforcement team in the southern city of Sanya where the contaminated beans originated.

Authorities in the central city of Wuhan recently announced they had destroyed 3.5 tonnes of beans from Sanya that had been treated with isocarbophos, a pesticide that is banned from use on fruits and vegetables.

Grand Field Group Holdings bogus China Chongqing gas pipeline

A Hong Kong court yesterday ruled that the former chairman of listed developer Grand Field Group Holdings, Wayland Tsang Wai-lun, and his wife should be remanded in custody.

It found the couple dishonest and said they provided "a pack of lies'' to the stock exchange and investors about a fake transaction in 2002 which had led companies, investors and the bourse to suffer losses.

Donald Tsang 77 on list of 80 most trusted

"Only Legislative Council president Tsang Yok-sing, League of Social Democrats chairman Wong Yuk-man and film star Jackie Chan are considered to be less trustworthy than the chief executive, who is ranked 77th in the list of 80."

Society breaking down

The wealth gap is widening such that there is no middle class - just into two camps where the 1% owns 90% of the resources. Teachers, scientists, technicians and engineers have become the slaves of that 1% where they are taxed at multiple points, first by the government then by the 1%.

Dual income couples starting off cannot break into the housing market generating hopelessness, frustration and anger.

This is an international phenomenon and the guillotines will be rolling out soon.

Wealth Disparities in U.S. Approaching 1920s Levels

CCIF CPA Limited

Hall of fame:

Fuji

First Natural (ex)

China Green

Mongolia Energy

Chaoda (ex)

Need to add the following to the red flag list.

Can I have that finger back please?

Another Fujian fraudster

Same old modus operand: CEO/Chairman steal funds, resigns with the board, transfers assets of company away. Local authorities find no evidence.

In this case a hedge fund (Start Investments) fights the good fight in China trying to recover it's property.

Chanos (Kynikos Associates) charitably calls this "leakage" and recommends using other markets countries with better rule of law as a proxy for any investments or shorts on China plays. (yes, Jim Chanos obviously has entered his short positions and with the recent burst of publicity is ernestly talking his book.)

There is one other major Fujian company highly touted by analysts and worth watching closely: Chaoda Modern (0682.HK)

The details in today's SCMP, coauthored by the increasingly competent Naomi Rovnick:

Stark Investments, the multibillion-dollar US hedge fund, has scored a partial victory in its long-running cat-and-mouse fight to seize assets from Sun Jiangrong, a Fujian tycoon it is pursuing over a S$120 million (HK$660 million) unpaid loan.

Yet Sun has now twice succeeded in transferring ownership of the real estate company to an outside entity allegedly controlled by his brother-in-law, using slightly different tactics each time.

Sino-Environment has defaulted on its US$109 million of corporate bonds. Its auditors, PricewaterhouseCoopers, said in November last year it could not verify the whereabouts of US$85 million of the company's cash. Sun resigned as chairman of Sino-Environment in January, along with the firm's entire executive board.


The Monetary Authority of Singapore is investigating the company. The Fuzhou police said in January they found no evidence of embezzlement at Sino-Environment.

Killer of Investment Banker released

.... hopefully to continue her good work

Bitch slapped

HK finest in action.

Cop down after a ferocious slap on the cheek
Uploaded by thedarksidehk. - See more comedy videos.

Ernst & Young settles in Moulin case

Moulin, which once claimed to be Asia's biggest manufacturer of eyewear, was wound up by the High Court in 2006 amid fraud allegations, owing lenders HK$2.7 billion. Ernst & Young was Moulin's auditor between 2002 and 2004.

The liquidator told creditors in private that one of Moulin's four biggest customers was really a Chinese restaurant in McCook, a town of 8,000 in Nebraska in the United States, people who attended the meetings said.

China Fraud Ltd.

First Natural Holdings (1076.HK) unfortunately is not the only Chinese company used to scam billions from the public.

The Nigerian 419 frauds cannot even compare to what is currently being perpetuated by Chinese companies listed in HK and Singapore. These publicly listed Chinese companies are run by their managers like personal fiefdoms with NO regulatory overview at best, at worst they are abetted by corrupt officials.

What does the HKex or SFC do about it?... NOTHING. The HKex in conflicting positions of both regulating and profiting off the market is all eager to accept IPOs while all too cavalier when policing the listed companies. The HKex faced with this conflict of interest clearly resolves it by forgoing any regulatory responsibility and just concentrates on profits.

The Singaporeans are now being stung by these scams. Chinese consumers can be thrown in jail for not paying credit card debts, but chinese company directors can openly steal billions and resort to gangster tactics with no consequences...

Fujian based companies seem to feature high in these shenanigans.

SCMP today:

Since late 2007, a spate of so-called S-chips - mainland companies listed on the Singapore exchange - have borrowed money then failed to repay the debts, with some becoming mired in fraud scandals.

Of the 11 S-chips that issued convertible bonds between 2005 and 2008, six have declared themselves unable to repay.

In June 2008, blue-chip investment bank Morgan Stanley sold US$109 million worth of convertible bonds issued by waste recovery group Sino Environment Technologies, based in Fujian , to a group of lenders including US investment firm Stark Investments.

Sino-Environment's share price has since crashed from S$1.30 (HK$7.18) on the day it sold the convertible bonds to S$0.135 when the stock was suspended from trading in September.

During that period, Sino not only defaulted on its bonds - the Singapore-listed firm is also being investigated by the city state's Monetary Authority, a person involved in the case confirmed, after its auditors Pricewaterhouse Coopers said they could not verify the whereabouts of US$85 million of Sino-Environment's cash.

The Monetary Authority declined to comment.

China Printing & Dyeing, a textiles company, is one of the group of S-chips that could not repay bank loans.

It has fallen under what the Singaporeans call "judicial management", the city state's version of bankruptcy protection.

China Printing & Dyeing's shares were suspended from trading in October 2008 when its chief executive Tao Shoulong and deputy chief executive Yan Qi, a husband and wife team, disappeared. The duo fled after a subsidiary announced it was unable to honour 2 billion yuan (HK$2.27 billion) worth of debts. The pair were subsequently arrested in Guangdong, according to numerous reports in Singapore. The company was delisted from the Singapore exchange last week, leaving its shareholders with nothing.

Then there was Yangtze River Delta aluminium company Ferro-China, which buckled under the weight of almost US$1 billion of debts in 2008 before entering mainland bankruptcy proceedings.

The most recent S-chip bond default came from China Milk Products Group, based in Heilongjiang, that produces bull semen and cow embryos for cattle breeders,

The vast majority of the investors who bought US$150 million worth of convertible bonds China Milk sold through Deutsche Bank in December 2006 have exercised an option to get their money back, a person close to the agricultural company confirmed.

China Milk's net profit tumbled 73 per cent in the three months to last June compared to a year previously. The business was hit by last year's tainted milk scandal on the mainland, which cut demand among dairy farmers for new livestock.

On January 5, China Milk told its bond holders it would not be able to meet a repayment deadline. The company said it had the cash but was awaiting approval from the State Administration of Foreign Exchange, the mainland regulator that controls the flow of funds to and from abroad, to get it out of China. A person with knowledge of the firm said China Milk was confident of repaying its bond holders as soon as possible.

Then there is the case of Sino-Environment, which according to a person close to the company, could take many months to resolve.

The entire executive board, including chairman Sun Jiangrong, resigned on January 2 and a bitter spat has broken out between Sino-Environment's independent directors, led by new chairman Charlie In Nany Sing, who were appointed by investors to sort out the mess, and its mainland staff.

In December, a workers union at one of the firm's subsidiaries, Thumb Env-Tech Group (Fujian) announced its "few hundred" workers would resign en masse because the parent company's independent directors were "attacking" the executive directors and the company.

After PriceWaterhouse Coopers issued its report, the independent directors obtained an injunction from the Singapore Supreme Court to ban Sino-Environment's executive directors from selling the company's assets or signing contracts.

In May, a Sino-Environment subsidiary said it paid 920 million yen (HK$79.53 million) to a Japanese firm for chemicals, but the alleged recipient told the auditors it never received the cash.

When PwC visited Sino-Environment's bank, Xiamen International Bank, in Quanzhou , to try to investigate, the bank's branch manager forced the accountants off the premises and shuttered the building.

Another subsidiary, Fuda Desai Environmental Protection, allegedly invested 230 million yuan in four waste power projects, but PwC could not find any evidence that the payments were approved by the board, or even made.

Again, the auditors attempted to verify documents relating to the deals at the branch of Bank of Communications (SEHK: 3328) through which Sino-Environment had made the supposed payments.

They were met by a personal relationship banker who would not let them talk to anyone else or check the branch's IT systems to see if the payment documents were real.

The Sino-Environment executive directors, who have since resigned, accompanied PwC on both bank visits.

A third subsidiary, Fujian Weidong EPT Co, made two interest-free loans worth 50 million yuan to "two parties that did not appear related to the company," the PwC report continued. The accounting firm said it "did not come across any documentation evidencing that the company's board had been informed of or approved these loans".

PwC complained that Sino-Environment's executive directors had "hampered the performance" of its work. The accounting firm said Sun Jiangrong, who declined to comment for this article, would not provide any documents supporting the supposed deals and payments.

A person involved in the discussions with the Sino-Environment's bond holders said there was no certainty the US$109 million would be returned to them. Morgan Stanley declined to comment on the case.

The SIAS' Gerald said Singapore could do nothing more than pass its concerns on to mainland authorities. And in China, the Sino-Environment case has already been closed. The Fuzhou Public Security Bureau said on January 1 it had found no evidence of embezzlement at Sino-Environment, according to an announcement on Sino-Environment's website. A spokesman for the Singapore Stock Exchange would not comment on the issue of S-Chips defaulting on their loans.

Of course, Hong Kong investors have suffered similar problems. Since late 2007, 11 mainland companies listed here have also failed to repay some or all of their debts, according to data.

A corporate debt salesman at an international bank, who asked not to be named, does not blame these mainland insolvencies entirely on the companies themselves. "There was so much demand in the boom years from hedge funds and banks for debt linked to Chinese companies," he said. Maybe everyone was a bit too dazzled by geography."

Beware.

First Natural 1076 - raped naturally: Chinese style

As show by the latest filing, we have a Fujian/China company listed in HK asset raped by management. The sad state of affairs started when the chairman (Yeung Chung Lung), son (Yang Le) and son-in-law(Ni Chao Peng) resigned from the board. The chairman and his son then subsequently disappeared.

Now First Natural, a public HK company cannot assert any ownership rights over it's subsidiaries in China, resulting in a loss of RMB$1.5B and all assets. The provisional liquidators in some cases cannot even get a hearing in a Chinese court:

(iii) Ningbo Dingwei

The Company has attempted to file a statement of claim with the Ningbo Intermediate People’s

Court of Zhejian Province ( ) but the filing was denied by the court.

The company had a over RMB$800m in cash and this has disappeared. Cash as seen on the balance sheets of Chinese companies is NO margin of safety for investors.

The family of thieving bastards:

Road King (1098.HK) pays HK$1B for.... what??!

Another case demonstrating the risk of doing in business in China with it's rudimentary rule of law. Road King enters into an agreement with Sunco to buy shares and effective control. Roadking pays $600m after which Sunco refuses to cede control. Roadking on the advice of "legal counsel" pays another $400m to cover further Sunco expenses on the hope they maybe able to recover that from Sunco at a later date.

Tragic and yet afar comedic. Has the makings of a classic Nigerian scam on a bigger scale..

One major cause of this mess is Road King's move away from it's core competency (toll roads) into property.

The Group commenced legal proceedings in the Tianjin Nankai District People’s Court in October 2007 to enforce its

rights and to assume effective control over the Tianjin Companies. However, the legal proceedings against the former

management of the Tianjin Companies were temporarily suspended in 2008 on the basis that unspecified facts which

related to those proceedings may overlap with unspecified matters under investigation by Tianjin authorities.

In January 2009, the Company received a notice advising that an investigation on a criminal accusation by Tianjin

authorities was officially dismissed. In addition to the legal proceedings as mentioned above, with the assistance

provided by the Tianjin municipal government, the Group is now gradually resolving the legacy problems of the

Tianjin Companies in Tianjin with a view to eventually obtain effective control over the Tianjin Companies. However,

at the date of this report, the former management of the Tianjin Companies has not yet handed over the official

seals and books and records to the Group and in the opinion of the Directors, the Group has not obtained control

over the Tianjin Companies. The Group will continue its best endeavours to obtain effective control over the Tianjin

Companies.

As the Group does not have control, and is not in a position to exercise significant influence, over the operating and

financing policies of the Tianjin Companies, the Tianjin Companies are not currently considered to be subsidiaries

or associates of the Company and therefore they are accounted for as available-for-sale financial assets. Accordingly,

the financial statements of the Tianjin Companies have not been consolidated into the Group’s condensed

consolidated financial statements. The investments in the Tianjin Companies, amounting to HK$638,526,000 as at

30 June 2009 (31 December 2008: HK$632,787,000), have been recorded at cost less impairment because the

investments are unquoted equity shares whose range of reasonable fair value estimates is so significant that the

Directors are of the opinion that the fair values cannot be measured reliably.

During the period ended 30 June 2009, the Group has made various payments on behalf of the Tianjin Companies,

including the settlement of their bank loans of RMB300 million, accrued interest on the bank loans, construction

costs and other expenses, totaling HK$446,086,000. These payments are considered as loans and advances to

the Tianjin Companies and based on the advice from the PRC legal counsel, the Group has the right to recover

these amounts due from the Tianjin Companies.

Based on the impairment review on the investments in, and loans and advances to, the Tianjin Companies, in the

opinion of the Directors, no impairment on the carrying amounts in relation to the Tianjin Companies is considered

necessary. However, as the timing and the eventual outcome of the court proceedings or the satisfactory resolutions

of the legacy problems of the Tianjin Companies cannot presently be determined with certainty, there exists

uncertainties that the Group may be unable to obtain effective control over the Tianjin Companies or otherwise

realise the underlying properties of the Tianjin Companies, thereby impacting the recoverability of the Group’s

available-for-sale financial assets amounting to HK$1,084,612,000 as at 30 June 2009.

PME Group (0379) convertible bonds, 91% discount!!

Company planning to raise $246M in cash from convertible bonds.

- Conversion shares of 487% of existing issued capital!!

- Conversion price of HK$0.03. Current stock price: $0.337. DISCOUNT OF 91%!!!!

- Current market capitalization : $623m (96% of book)

So shareholders (74.5% in public hands) are going to get savagely raped by the management who think the shares are worth less than 10% of book value.

Who gets the convertible bonds? In the filing:

“Placee(s)” any individual(s), institutional(s) or other professional investor(s)

procured by the Placing Agent, pursuant to the Placing Agent’s

obligations under the Placing Agreement, to subscribe for any part

of the Convertible Bonds

“Placing” the placing of the Convertible Bonds, on a best effort basis, by the

Placing Agent (pursuant to the Placing Agreement) under specific

mandate.

“Placing Agreement” the agreement dated 7 January 2010 and entered into between the

Company and the Placing Agent in relation to the Placing

No prizes for guessing what the shares will do tomorrow.

The SFC and HKex sleeping as usual.

Beware.