HONG KONG, June 28 (Reuters) – Hong Kong’s securities regulator has begun proceedings against the former chairman and CEO of China Forestry for suspected false disclosure of information in the timber company’s IPO prospectus and its 2009 results announcement.
The Securities and Futures Commission’s (SFC’s) latest move comes as it is widening its probe into cases of alleged market manipulation and corporate fraud that risk tarnishing the former British colony’s reputation as a global financial centre.
In a statement on Thursday, SFC said that China Forestry allegedly maintained a set of accounting records that was different from the records provided to its then auditors KPMG.
The scope of the allegedly false or misleading information as disclosed by China Forestry was “extensive”, SFC added.
The regulator said China Forestry’s turnover appeared to have been overstated by at least 92 percent while its plantation assets, purportedly accounting for over 79 percent of its net assets, appeared to have been overstated by at least 87 percent.
The proceedings against China Forestry’s former chairman, Li Kwok Cheong, and its former CEO, Li Han Chun, started in Hong Kong’s market misconduct tribunal, an independent three-member body, including a presiding judge or former judge.
Reuters was not able to contact China Forestry or the two executives for comments.
Last year, the SFC began and later dropped a lawsuit against Standard Chartered Plc and UBS Group AG over their roles in China Forestry’s IPO.
China Forestry raised $216 million in the offering, but its shares have been suspended since January 2011 after its auditor said it had found possible accounting irregularities.
The company is now in liquidation and has been delisted from the Hong Kong exchange.
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Author: Alun John