Almost 3 years after the stock was suspended with a market value of HK$1.89bn, investors must be wondering whether any criminal charges will be brought in relation to the fraud suspected by the liquidators (see our article of 24-Dec-2008).
On 16-Sep-08 in our article Peace Mark's warning signals, we mentioned that we had received anonymous allegations against Peace Mark (Holdings) Ltd (PM Holdings, 0304) since we took down Egana in Jul-07, but we were were still unable to publish those allegations, for lack of evidence. Now a High Court judgement published on Monday this week (23-Dec-08), which approves the sale of parts of the Peace Mark business to Chow Tai Fook Jewellery Co Ltd, sheds some light on the situation found by the provisional liquidators, Roderick John Sutton and Vincent Fok Hei-yu of Ferrier Hodgson Ltd.
In the judgement (which is a write-up of a decision he made orally in Chambers on 13-Nov-08), Deputy High Court Judge Anthony To Kwai-fung writes in relation to PM Holdings and its wholly-owned subsidiary Peace Mark Limited (PM Limited) at paragraph 8:
"Since taking over the Group, the Provisional Liquidators have serious doubt about the integrity of the senior management of PM Holdings and PM Limited such that they considered the ongoing control of the Group should not continue to be entrusted to the original management...
In the course of their investigation into the debts of the Group, they became concerned over the legitimacy of both sales and trade receivables relating to the Group’s wholesale and distribution business. They thought the Group had partially financed its acquisitions and loss making businesses via a trade finance “money go-round” utilizing sales of non-existent goods to corporate entities controlled by parties with close ties to the management of the Group that actually carry on little, if any, legitimate business. It appears that the Group’s operations are substantially smaller and less profitable than reported in its reports."
Of course, these concerns remain to be proven in court, and any parties involved are innocent unless proven guilty, but it does give you some idea of where the investigations are heading. The Police Commercial Crime Bureau should take an interest in this if they are not already. Watch this space.
香港傳統智慧「發三師」，即係做專業人士錢途無限，但近年世界變，專業人士搵食隨時要搵命博，八方冇誇張，最新一期會計師公會官方雜誌《 A Plus》就披露咗個會計師被槍指頭嘅驚險故事。
專做合併、上市前盡職審查（ Due Diligence,DD）嘅顧問公司老闆 Steve Vickers接受《 A Plus》訪問時，形容大陸係「 Wild East」，佢手下會計師北上巡廠、查公司賬目時步步驚心，曾經有會計師被困房內，俾人用槍指住個頭！
Steve話好多小公司老闆唔知道 DD做乜，以為去算賬別有用心，因此好抗拒會計師睇數。仲有啲做戲咁做嘅 case，就喺民企搵老臨扮銀行經理，向查數嘅會計師出示偽造賬目文件，佢話近期見到越來越多大陸公司用疑似銀行信件去呃會計師，若然睇漏眼就唔得掂。2 : GS(14)@2011-07-30 17:02:47
http://app1.hkicpa.org.hk/APLUS/ ... -selling-output.pdf
As he does for all companies he’s looking to short – making money by betting that the share price of a stock should be much lower – he pulled out Gulf Resources’ financial records and cross-compared them with equivalent companies. A look at Gulf Resources’
balance sheet from its 2009 annual report stopped him cold, he says.
“The American equivalent was a company, which is now private, called Great Lakes Chemical,” Hempton tells A Plus. The company, which was last publicly listed six years ago, recorded an inventory of US$324 million and sales of US$1.6 billion on its 2004 annual report – meaning it turned over its inventory five times
But Gulf Resources recorded US$110 million in sales with US$650,000 in inventories. “In other words, they turned their inventory stock over 170 times per year?” Hempton asks rhetorically. “That just didn’t make sense.”3 : GS(14)@2011-07-30 17:06:50
http://app1.hkicpa.org.hk/APLUS/ ... 5-due-diligence.pdf
Even professionals can be swayed. Vickers recalls instances of targets under investigation being tipped off in advance, while Lane of Red Flag says he has heard of local due-diligence and other compliance-related staff succumbing to the temptation of under-the-table payments. “It usually happens to junior employees,” Lane says.4 : 龍生(798)@2011-07-31 12:23:00