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Monday, 16 March 2009
Oriental Century appoints legal adviser, special accountant
The little-known, hardly chased stock Oriental Century has this week become the latest accounting scandal casualty among Singapore-listed Chinese firms or S-chips.
Oriental Century appoints legal adviser, special accountant
Lynette Khoo 14 March 2009
The little-known, hardly chased stock Oriental Century has this week become the latest accounting scandal casualty among Singapore-listed Chinese firms or S-chips.
Oriental yesterday appointed PricewaterhouseCoopers LLP as the special accountant (SA) to carry out an independent limited financial review to assess its financial position and the circumstances surrounding the various assertions made by its chairman and CEO, Wang Yuean.
It has also appointed WongPartnership LLP as its legal advisers in the matter.
The group said that this was in line with the intention of the board and audit committee ‘to address and resolve the issues concerning its accounts and financial position expeditiously’.
Just a day before, the China-based education provider disclosed that Mr. Wang has confessed to cooking the books for years and diverting money to an interested party.
He claimed to have inflated sales and cash balances, which now means that the previous years’ financial statements, including fiscal 2008, may be inaccurate or unreliable. This has cast a doubt over the group’s ability to operate as a going concern.
‘Given the nature of the group’s business, the board is very mindful of any disruptions to the group’s business in PRC that may cause irreparable damage leading to a collapse of confidence amongst its student body and teaching faculty,’ Oriental said yesterday.
‘Together with the company’s advisers, the board will be evaluating various courses of action open to the company after taking into account the findings of the SA.’
Mr. Wang is said to be in China. Chief investment officer Lei Hua, who is acting CEO, is currently in China to assume control and sustain the continuing operations of the group and to take steps to safeguard the remaining assets of its Chinese entities.
Despite this, some market watchers now see the difficulties of enforcing the law on those culpable of mismanagement if they are not residing in Singapore, given the absence of an extradition treaty between Singapore and China.
This has often been the worry for foreign listings with no operations or assets in Singapore, and in some cases, even without an office here. ‘It is a practical problem, that at the end of the day, how do we effect an enforcement,’ said Robson Lee, partner at Shook Lin & Bok. ‘We can uncover all the evidence of wrongdoings by persons situated in a different country, so how do we bring him back to face the music, to face charges?’
Mr. Lee called this is an ‘inherent risk’ that Singapore faces with most foreign listings.
Drew & Napier solicitor Wendell Wong said that the authorities on both sides need to work very closely to ensure that perpertrators are not allowed to escape the law due to jurisdiction issues. They may work with Interpol but an obvious option is to work with the Chinese authorities or sending investigators there.
Oriental is incorporated in Singapore and is therefore governed by the Singapore Companies Act. But so too was China Printing & Dyeing, which fell into trouble after its parent firm Jianglong Holdings went bankrupt and the group’s former CEO and deputy CEO went missing.
But so far, there is no concrete news of the duo being arrested and brought to account. This raises the question of how errant management not residing here can be extradited and brought to justice.
‘It remains to be seen if the authorities are able to ensure that the CEO can be extradited to answer some queries that the authorities may have,’ Mr. Wong said.
Prior to listing in 2006, Oriental was involved in a legal dispute with Singapore-based GL Capital, which took it to the High Court to claim payment for services rendered. It was indemnified by existing Oriental shareholders then.
Subsequently in April 2007, co-founder of the group Zhu Xiaolin stepped down as non-executive director among board changes to make way for a smaller Board - which Mr. Wang said was meant to ‘maximise our directorial resources and react quicker to challenges and expansion opportunities ahead’.
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Oriental Century appoints legal adviser, special accountant
Lynette Khoo
14 March 2009
The little-known, hardly chased stock Oriental Century has this week become the latest accounting scandal casualty among Singapore-listed Chinese firms or S-chips.
Oriental yesterday appointed PricewaterhouseCoopers LLP as the special accountant (SA) to carry out an independent limited financial review to assess its financial position and the circumstances surrounding the various assertions made by its chairman and CEO, Wang Yuean.
It has also appointed WongPartnership LLP as its legal advisers in the matter.
The group said that this was in line with the intention of the board and audit committee ‘to address and resolve the issues concerning its accounts and financial position expeditiously’.
Just a day before, the China-based education provider disclosed that Mr. Wang has confessed to cooking the books for years and diverting money to an interested party.
He claimed to have inflated sales and cash balances, which now means that the previous years’ financial statements, including fiscal 2008, may be inaccurate or unreliable. This has cast a doubt over the group’s ability to operate as a going concern.
‘Given the nature of the group’s business, the board is very mindful of any disruptions to the group’s business in PRC that may cause irreparable damage leading to a collapse of confidence amongst its student body and teaching faculty,’ Oriental said yesterday.
‘Together with the company’s advisers, the board will be evaluating various courses of action open to the company after taking into account the findings of the SA.’
Mr. Wang is said to be in China. Chief investment officer Lei Hua, who is acting CEO, is currently in China to assume control and sustain the continuing operations of the group and to take steps to safeguard the remaining assets of its Chinese entities.
Despite this, some market watchers now see the difficulties of enforcing the law on those culpable of mismanagement if they are not residing in Singapore, given the absence of an extradition treaty between Singapore and China.
This has often been the worry for foreign listings with no operations or assets in Singapore, and in some cases, even without an office here. ‘It is a practical problem, that at the end of the day, how do we effect an enforcement,’ said Robson Lee, partner at Shook Lin & Bok. ‘We can uncover all the evidence of wrongdoings by persons situated in a different country, so how do we bring him back to face the music, to face charges?’
Mr. Lee called this is an ‘inherent risk’ that Singapore faces with most foreign listings.
Drew & Napier solicitor Wendell Wong said that the authorities on both sides need to work very closely to ensure that perpertrators are not allowed to escape the law due to jurisdiction issues. They may work with Interpol but an obvious option is to work with the Chinese authorities or sending investigators there.
Oriental is incorporated in Singapore and is therefore governed by the Singapore Companies Act. But so too was China Printing & Dyeing, which fell into trouble after its parent firm Jianglong Holdings went bankrupt and the group’s former CEO and deputy CEO went missing.
But so far, there is no concrete news of the duo being arrested and brought to account. This raises the question of how errant management not residing here can be extradited and brought to justice.
‘It remains to be seen if the authorities are able to ensure that the CEO can be extradited to answer some queries that the authorities may have,’ Mr. Wong said.
Prior to listing in 2006, Oriental was involved in a legal dispute with Singapore-based GL Capital, which took it to the High Court to claim payment for services rendered. It was indemnified by existing Oriental shareholders then.
Subsequently in April 2007, co-founder of the group Zhu Xiaolin stepped down as non-executive director among board changes to make way for a smaller Board - which Mr. Wang said was meant to ‘maximise our directorial resources and react quicker to challenges and expansion opportunities ahead’.
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