After the melamine in milk, plastic in rice, led in children’s toys, and other harmful chemicals in pet foods…..should we have expected accounting standards to be kosher ?
“Can any accounting out of China be trusted? This is what prudent investors have to start asking themselves. Since early this year a new report comes out nearly every week that reveals some alleged misbehavior on the part of yet another China-based firm. The first firm to earn the spotlight was a billboard company, but now some of China’s biggest state-owned firms are taking the stage. If the state-owned firms are fudging on the books or ‘overlooking’ key data, how on earth do investors trust any company’s reports in China?
Aluminum Corporation of China, or Chinalco, is a holding company and the controlling shareholder in Aluminum Corporation of China Ltd. (NYSE: ACH), or Chalco. Along with China National Offshore Oil Corp. and China Unicom, which respectively control Cnooc Ltd. (NYSE: CEO) and China Unicom (Hong Kong) Ltd. (NYSE: CHU), Chalco has been named as one of 17 state-owned enterprises to have irregularities and other violations in their financial statements to the Chinese government in fiscal year 2009. China’s Xinhua news agency reports that by March of this year 735 irregularities had been corrected and “65 people responsible for the irregularities or violations have been punished.”
The accounting irregularities for the 17 companies included overstatement of assets, profits, and liabilities by $292.4 million, $405 million, and $528 million, respectively. Undercounted assets totaled $446 million, while undercounted profits totaled $185 million, and undercounted liabilities totaled $385 million….”
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