Open Letter to SGX/MAS: Reply to CFO of SGX-Listed China Environment (CENV SP) on report “Potential Accounting Tunneling Fraud at China Environment?” – Address the accounting and governance concerns in an SGX/MAS announcement

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Related posts: (1) China Environment: Auditor Emphasis of Matter raises more questions on potential accounting tunneling risk; (2) CFO reply: https://asianextractor.com/2015/02/10/potential-accounting-tunneling-fraud-at-china-environment/#comment-785 (3) Does Auditor Explanatory Language in Unqualified Audit Reports Indicate Increased Financial Misstatement Risk? “Emphasis of matter” language predicts restatements

Dear Mr Chiar,

Thank you for your reply addressing part of the corporate governance and accounting issues that were raised in Part 1 of the three-part article series that was based on the financial statements audited by Baker Tilly TFW LLP. We note that Baker Tilly did not disclose the name of its local auditor partners in the subcontract work for the wholly-owned subsidiaries Fujian Dongyuan 福建东源环保 and Anhui Dongyuan (Footnote 13) with the carrying value of RMB673.5m in FY14 (FY13: RMB698.7m), which form a very substantial part of the asset value of the group. We also note that Baker Tilly was recently fined in Dec 2014 by the U.S. SEC over audit failures tied to a mainland company suspected of fraud involving undisclosed related-party transactions; the audit failure was a result of subcontracting the audit work to a local partner. Continue reading →

[Flashback] Shares in Boshiwa Suspended as Auditor Resigns

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http://www.forbes.com/sites/forbesasia/2012/03/15/shares-in-boshiwa-suspended-as-auditor-resigns/

Posted by Amy CHAN Wen Yi, Year 4 undergrad at the School of Accountancy, Singapore Management University

Boshiwa International Holding Ltd., a Hong Kong listed Chinese chain of children’s apparel and a licensee of global brands like NBA and Harry Potter, declared that Deloitte Touche Tohmatsu has resigned as its auditor due to doubts about corporate governance.

Shares in the Shanghai company, which FORBES ASIA profiled in December, were suspended from trading at noon on March 15 after its second announcement that day. Its share price fell 35%, with its value shrinking to $449 million. Its market capitalization hit $2.4 billion on the IPO organized by UBS, Credit Suisse, and Bocom International, but dropped about 70% over last year. Continue reading →

[Flashback] Fake Profit E-Mails at AgFeed’s Farms Back Fraud Claims

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http://www.bloomberg.com/news/articles/2013-12-22/fake-profit-e-mails-at-agfeed-s-farms-back-fraud-claims

osted by Amy CHAN Wen Yi, Year 4 undergrad at the School of Accountancy, Singapore Management University

A finance manager in China reached out to her bosses, concerned that auditors would discover AgFeed Industries Inc. was reporting bogus revenue.

“Sometimes I really want to work well on the real stuff, but the need to balance the falsified data often takes up my time,” Wu Jiangqi wrote to supervisors at the Nanchang, China-based animal-feed company in 2009, according to a copy of an e-mail she sent.

Wu’s e-mail focused on top management’s “most serious headache, which can only be resolved by money,” then-Chief Executive Officer Xiong Junhong responded. Officials were “thinking of ways to get 30 to 40 million to resolve this!” he wrote. Continue reading →

[Flashback] Sri Lanka to give justice to victims of securities fraud: SEC Chief

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http://economynext.com/Sri_Lanka_to_give_justice_to_victims_of_securities_fraud__SEC_Chief-3-1217.html

Posted by Latha Do NADARAJAN , Year 3 undergrad at the School of Accountancy, Singapore Management University

Sri Lanka’s stock market regulator is making efforts to bring those who engaged in securities fraud during a stock market bubble in 2011 to justice, its re-appointed chief Tilak Karunaratne said.

Karunaratne said the stocks were pumped and dumped on unsuspecting investors during a stock market bubble which peaked around 2011.

He said investors who lost money during the period are still calling and making complaints against some brokers and margin providers. Continue reading →

[Flashback] Economic Milestone: Stock Market Scam (1992)

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http://forbesindia.com/article/independence-day-special/economic-milestone-stock-market-scam-(1992)/38457/1#ixzz3TmxgHvXA

Posted by Latha Do NADARAJAN , Year 3 undergrad at the School of Accountancy, Singapore Management University

The year 1992 will go down in the history of India as the year of the stock market scam. Harshad Mehta, a broker known for his rags-to-riches story and a poster boy for many investors, had used receipts of public sector banks to manipulate stock prices.

Mehta siphoned off around Rs 1,000 crore from the banking system to buy stocks on the Bombay Stock Exchange. As he pumped in money, the markets continued to achieve new highs. Retail investors took cues from what Mehta was buying and followed in the footsteps of the ‘Big Bull’. Continue reading →

Malaysian regulator sues 10 in Iris share fraud

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http://www.reuters.com/article/2008/04/09/iris-idUSKLR15551720080409

Posted by Latha Do NADARAJAN , Year 3 undergrad at the School of Accountancy, Singapore Management University

Malaysia’s market regulator has filed a landmark civil lawsuit against eight foreign parties and two Malaysians over alleged manipulation, rigging and fraud of Iris Corp (IRIB.KL) shares, the regulator said on Wednesday.

Iris, which makes electronic passports, was a darling of retail investors in 2006 when its shares soared 1,500 percent over eight months before regulators moved in to curb excessive speculation.

The Securities Commission said it sued, among others, U.S.-based hedge fund Aeneas Capital Management, and Priam Holdings Ltd, which ran Aeneas’ Malaysia-only Priam fund. Continue reading →

[Flashback] Auditors highlight several critical areas in 1MDB’s books

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http://www.thestar.com.my/Business/Business-News/2014/04/22/Auditors-highlight-several-critical-areas-in-its-books-and-reveal-more-funds/?style=biz

Posted by HOH Sheue Jing, Year 2 undergrad at the School of Accountancy, Singapore Management University

Auditors highlight several critical areas in 1MDB’s books

Tuesday, 22 April 2014

PETALING JAYA: The new auditors of 1Malaysia Development Bhd (1MDB) highlighted several critical areas in the accounts for the period ended March 31, 2013, which revealed that a sum of US$1.58bil (RM4.9bil) which was meant to be used for the development of the Tun Razak Exchange (TRX) has been placed with overseas investment institutions. Continue reading →

Caught in a web of spinoffs: Inside Canada’s expanding universe of ‘shell’ companies; the concern over the use of shell companies for unscrupulous purposes prompted the U.S. SEC to launch Operation Shell Expel. The idea is to flush out “pump and dump” schemes, where stock is heavily and sometimes falsely promoted to unknowing investors, while the perpetrators sell at high prices before the stock crashes. The SEC has ejected more than 800 dormant companies from the market since 2012.

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http://business.financialpost.com/2015/03/06/caught-in-a-web-of-spinoffs-inside-canadas-expanding-universe-of-shell-companies/

http://business.financialpost.com/2015/03/06/the-spinoff-frenzy-that-started-with-tiny-noor-energy/

Caught in a web of spinoffs: Inside Canada’s expanding universe of ‘shell’ companies

Barbara Shecter and Peter Koven | March 6, 2015 | Last Updated: Mar 6 2:40 PM ET

In the grand scheme of up-and-coming Canadian business stories, Danny Wettreich’s company, Winston Resources Inc., barely registers. It trades for half-a-penny per share, with a market capitalization of less than $50,000. Almost nobody’s heard of it.  Continue reading →

China investigating Trafigura fraud claims

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http://www.independent.co.uk/news/business/news/china-investigating-trafigura-fraud-claims-10086819.html

Posted by LAM Xin Hui, Year 4 undergrad at the School of Accountancy, Singapore Management University

JAMIE DUNKLEY | Thursday 05 March 2015

Chinese police have frozen two bank accounts held by the commodities trading house Trafigura as part of an investigation into an alleged $32m (£21m) fraud.

The company has been implicated in a scandal involving an oil-trading company, Qingdao United Energy. It is claimed that trader Zhang Wei arranged illegal deals with a worker at Trafigura.

According to reports, Zhang bought 700,000 barrels of petrol from Trafigura at the market price using letters of credit issued by Qingdao, and then sold them back to Trafigura at a discount of $32m.

Continue reading →

[Flashback] Cash-Poor Companies Feed Investor Hunger for ‘Happy Meals’

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http://www.wsj.com/articles/SB10001424127887323829104578622011650335422

Posted by Nureen CHAN Wan Wei , Year 4 undergrad at the School of Accountancy, Singapore Management University

When Energy Conversion Devices Inc. needed cash, the struggling solar-panel maker turned itself into what Wall Street likes to call a “Happy Meal.”

To make $316 million in bonds more appetizing, the company agreed to lend millions of its shares to hedge funds buying the bonds so they could simultaneously sell the stock in a bet against Energy Conversion’s success.

A subsequent crisis in the solar-power industry hit Energy Conversion hard. The bonds, issued in 2008, plunged in value, and last year the company filed for bankruptcy protection, wiping out shareholders. But the negative wagers paid off for the hedge funds. A Wall Street Journal examination showed that hedge funds that bought the bonds were positioned to earn upward of 20% on their investments. Continue reading →