One of the highest accounting fraud in India since Satyam with Delhi-based Lilliput Kidswear under liquidation; Bain brought action against EY for “fraud, aiding and abetting fraud, negligent misrepresentation”

http://www.vccircle.com/news/consumer/2015/01/13/lilliput-kidswear-under-liquidation-promoter-says-has-stay-order

Lilliput Kidswear under liquidation; promoter says has a stay order

Shruti Ambavat, 14 January 2015, VC Circle

The firm unsuccessfully tried to rope in new investors and revive plans for IPO. Kids’ apparel retailer Lilliput Kidswear Ltd, the Delhi-based firm which had locked horns with its PE investors Bain Capital and TPG four years ago leading to an eventual exit of the investors from the firm, is now under liquidation, it is learnt. This could bring the debt-laden firm to the end of the road after it unsuccessfully tried to resurrect by roping in new investors. The company was facing several cases from lenders and other debtors with winding up petitions over pending payments.

As per records of the Registrar of Companies (RoC) the firm is under liquidation. However, Sanjeev Narula, promoter and chief of Lilliput Kidswear, said the firm is still contesting the winding up petitions and said he has a stay order on liquidation from the court. A consortium of bankers led by Allahabad Bank had filed for action against the company under SARFAESI Act 2002. As reported earlier, several lenders including China Trust Bank had filed court cases to recover their dues.

Its troubles started a year after it attracted Bain and TPG to co-invest to pick 45 per cent stake together in Lilliput Kidswear in 2010. In particular Bain invested Rs 265 crore ($59 million) to buy 31 per cent of which Rs 114 crore was invested in the company and the rest to buy previous PE investor Everstone Capital’s stake in the firm.

Bain and TPG Capital had alleged they were alerted to problems with the accounts at Lilliput by an unnamed whistle-blower, who is believed to be a former senior executive at Lilliput. The whistle-blower had apparently approached EY (formerly E&Y) but the red flag was dismissed and the auditor certified the company’s accounts once again. Continue reading

How oil prices will reveal financial foul play; financial accounting fraud has gone from taking up roughly 10 to 15% at the Fort Worth regional office of SEC office’s docket in 2010 to roughly 30% currently.

http://www.bizjournals.com/houston/morning_call/2014/12/how-oil-prices-will-reveal-financial-foul-play.html?s=print

How oil prices will reveal financial foul play

Suzanne Edwards

22 December 2014

Houston Business Journal Online

As oil prices force upstream oil and gas companies to make some hard decisions, investment advisers will be tested on how well they hedged against companies that may have over-reported their production and reserve amounts, said Tom Ajamie, managing partner at Houston-based Ajamie LLP. “Now as oil prices have fallen, you’re going to see who had too much debt,” Ajamie said. “You’re going to see maybe who was inflating reserves and inflating prospects.” Continue reading

Accounting fraud is ripe for fresh scrutiny

http://blogs.reuters.com/breakingviews/2014/12/30/accounting-fraud-is-ripe-for-fresh-scrutiny/

Accounting fraud is ripe for fresh scrutiny

30 December 2014

Reuters News

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Reynolds Holding

NEW YORK, Dec 30 (Reuters Breakingviews) – Dodgy numbers will replace insider trading as Wall Street watchdogs’ preferred prey in 2015. New auditing and analytics have already given the U.S. Securities and Exchange Commission a head start, even if the 2002 Sarbanes-Oxley reforms make cases of accounting fraud harder to track down. Continue reading

S. Korea banks feared to suffer massive losses on mounting bad loans; Taihan, one of South Korea’s largest electrical materials manufacturers, was suspended from stock trading by the bourse operator on Dec. 24 for accounting fraud.

http://english.yonhapnews.co.kr/business/2015/01/07/12/0501000000AEN20150107002400320F.html

S. Korea banks feared to suffer massive losses on mounting bad loans

7 January 2015

Yonhap English News

SEOUL, Jan. 7 (Yonhap) — South Korean banks are expected to suffer massive losses due to a series of bankruptcies and suspensions of big-name companies amid a protracted economic slump in the country, industry data showed Wednesday. Dongbu Corp., a construction arm of the 18th-largest conglomerate Dongbu Group, filed for court receivership last week, after admitting it was unable to pay off some 262 billion won (US$238 million) it had borrowed from several local banks, according to the data. Banks will likely set aside reserves against the bad loans extended to the builder, and their loan-loss reserves are expected to increase further if the financially shaky firm’s 1,713 subcontractors go bankrupt in the near future.

Taihan Electric Wire Co., one of South Korea’s largest electrical materials manufacturers, was suspended from stock trading by the bourse operator on Dec. 24 for accounting fraud. Continue reading