Winding-Up Judgment of Fraudulent China Metal Recycling (773 HK) – Graphic and Extent of Overstatement

http://legalref.judiciary.gov.hk/lrs/common/ju/ju_frame.jsp?DIS=97425&currpage=T

image001image002

Extent of the overstatement

  1. It is instructive to conclude by illustrating the extent of the overstatement arising from the round robin transfers described earlier in this decision.  The following are the overstated revenue and gross profit of the Company for the years 2007 to 2009 calculated respectively by the Commission and by Mr Morrison under the two approaches used by him in his report, the precise details of which are not relevant for present purposes:
Calculated by: Overstated gross profit Overstated revenue
The Commission US$143,291,911
(73.22%)
US$1,049,036,307.00
(46.67%)
Mr Morrison under Approach 1 US$140,555,466.41
(72%)
US$1,034,447,611.47
(46%)
Mr Morrison under Approach 2 US$113,480,065.38
(58%)
US$817,478,313.33
(36%)
  1. As for the year 2012, Mr Morrison’s calculation is as follows:
Calculated by: Overstated gross profit Overstated revenue
Mr Morrison US$147,185,227.18
(49%)
US$1,341,877,306.15
(12%)

Conclusion

  1. In my view the evidence adduced by the Commission establishes that a fraud on a massive scale has been perpetrated by those in charge of the Company on investors, the Stock Exchange and others involved in the listing of the Company.  It seems highly likely that Mr. Chun caused the round robin transactions and the creation of bogus bills of lading with a view to producing significantly better figures than would otherwise be the case.  This must have been done in order to advance the IPO and induce investors to subscribe for shares.  Having started this process necessarily it had to be continued.  There would appear to have been at the very least serious contraventions of section 298 of the SFO and section 342F of the C(WUMP)O.
  2. As will be clear from the earlier parts of this decision this is not a case of isolated wrongful acts which are unlikely to be repeated.  Neither is this a case of wrongdoing which initially was limited in scope but which circumstances caused the instigator to lose control of as it grew like topsy.  Clearly this was a carefully planned and carefully implemented scheme to create accounts which significantly overstated the business and profit of the Company for the purposes of the listing and thereafter.  This was fraud on an industrial scale, which goes directly to the integrity of the listing.  It is difficult to think of a clearer case of it being in the public interest that a petition be brought by the Commission for a winding up.  This case would appear to fall firmly into the category of cases in which the courts take the view that a winding-up order is appropriate.

Continue reading

Rasoya Proteins falls 4% as Sebi says capital market ban for alleged fraudulent activities with respect to company’s GDR issue will stay

http://www.livemint.com/Money/dBK26xVLmKbWlurlJygaQM/Rasoya-Proteins-falls-4-as-Sebi-says-capital-market-ban-to.html

Rasoya Proteins falls 4% as Sebi says capital market ban to stay

Ashwin Ramarathinam, 24 March 2015, Mint

Mumbai, March 24 — Shares of Rasoya Proteins Ltd

fell 4.11% to Rs.0.70 on BSE after the Securities and Exchange Board of India (Sebi) said that market ban for alleged fraudulent activities will stay. On Monday, the capital market regulator said restrictions on Rasoya Protein and nine other entities from the capital markets will remain in place, in a case related to fraudulent activities with respect to the company’s global depository receipts (GDR) issue. Sebi on 24 September 2014 barred Rasoya Protein, its four directors and five other entities from the capital markets for alleged fraudulent activities with respect to the company’s Global Depository Receipts (GDR) issue. GDR is a financial instrument used by companies to raise capital overseas. The interim order was passed after a preliminary probe by Sebi found the involvement of these entities in market manipulation. Rasoya Protein and its four directors-Prashant Duchakke, Anil Lonkar, Sameer Damle and Ajay K. Singh-were found to have colluded with Arun Panchariya, India Focus Cardinal Fund (owned by him), Pan Asia Advisors, Vintage FZE and its director Mukesh Chauradiya.

Are markets developed by regulators, or crooked geniuses like Mike Milken & Harshad Mehta?

http://articles.economictimes.indiatimes.com/2015-03-25/news/60475276_1_public-debt-management-agency-jahangir-aziz-reserve-bank

Are markets developed by regulators, or crooked geniuses like Mike Milken & Harshad Mehta?

MC Govardhana Rangan

26 March 2015

The Economic Times

Who is the hero of the ongoing World Cup tournament? Brenden McCullum, or the International Cricket Council? Did Sachin Tendulkars and Kapil Devs make cricket a popular sport in India, or the Board of Control For Cricket in India?

If people ‘play’ in financial markets, what is true for cricket could be true for equities and bond markets as well. Historically, the Reserve Bank of India (RBI) has been ruling the government securities market. Now, the plan is to shift it to the Securities & Exchange Board of India (Sebi) and equip an ‘independent’ debt management agency to take over the role of RBI as the government’s investment banker. Continue reading

Late audits halt trading in Morgan Stanley-backed stocks Tianhe Chemicals (1619 HK) and Sihuan Pharmaceutical (460 HK)

http://news.yahoo.com/audits-halt-trading-morgan-stanley-backed-stocks-045755275.html

Late audits halt trading in Morgan Stanley-backed stocks

Jeff Horwitz

Associated Press

30 March 2015

WASHINGTON (AP) — Two major companies in a prominent $1.4 billion Asia investment fund managed by New York banking giant Morgan Stanley unexpectedly told securities regulators they will not file their financial statements on time and froze trading in their stocks, actions generally considered to be cause for concern. The publicly traded companies, Tianhe Chemicals Group Ltd. and Sihuan Pharmaceutical Holdings Group Ltd., separately announced late last week that they would be unable to meet Hong Kong Stock Exchange deadlines because auditors have not yet signed off on their financials. Both companies pledged to cooperate with the auditors.

Tianhe and Sihuan are valued at $3.7 billion and $6 billion, respectively. They are among 16 companies that comprise a private equity fund managed by Morgan Stanley & Co. LLC, known as Morgan Stanley Private Equity Asia Three, or MSPEA III. An Australian and an Indian company owned by that fund have already failed amid criminal and civil fraud allegations. Continue reading

Hyundai Elevator Share Plan Frustrates Foreign Investors; Schindler Holding fails to stop Hyundai Elevator from revising rules on new shares and providing financial assistance for ailing affiliates

http://www.wsj.com/articles/hyundai-elevator-share-plan-frustrates-foreign-investors-1427435704

Hyundai Elevator Share Plan Frustrates Foreign Investors; Schindler Holding fails to stop Hyundai Elevator from revising rules on new shares

IN-SOO NAM

Updated March 27, 2015 1:58 a.m. ET

SEOUL—The failure of a Swiss elevator maker to stop a Hyundai Group company from revising its rules to increase share capital has frustrated foreign investors who want changes to South Korea’s corporate governance. Continue reading

Prosecutors raided the head offices of Dongkuk Steel, Korea’s third-largest steel company, and the residence of its Chairman Chang Sae-joo as part of a probe into allegations of embezzlement and tax evasion within the firm

http://www.koreatimes.co.kr/www/news/nation/2015/03/116_176109.html

Updated : 2015-03-29 20:26

Dongkuk Steel offices raided over embezzlement allegations

By Chung Hyun-chae

Prosecutors raided the head offices of Dongkuk Steel, the nation’s third-largest steel company, and the residence of its Chairman Chang Sae-joo as part of a probe into allegations of embezzlement and tax evasion within the firm.
About 50 investigators from the Seoul Central District Prosecutors’ Office seized accounting books, overseas trade records, and related computer files from the company’s headquarters in central Seoul and the offices of its affiliates from Saturday through early Sunday morning. Continue reading

Prosecutors are investigating allegations of fraudulent accounting at Keangnam Enterprises, a construction company at the center of a probe into the Lee Myung-bak administration’s failed “energy diplomacy.”

http://www.koreatimes.co.kr/www/news/nation/2015/03/116_176111.html

Updated : 2015-03-29 18:25

Prosecution probes fraud allegations at Keangnam

By Kim Rahn

Prosecutors are investigating allegations of fraudulent accounting at Keangnam Enterprises, a construction company at the center of a probe into the Lee Myung-bak administration’s failed “energy diplomacy.” Prosecutors suspect that the company fabricated its financial situation while it was in the debt workout program. They believe the company did this in order to qualify for the government’s special loans for overseas energy development projects. Continue reading