Showing posts with label accounting irregularities. Show all posts
Showing posts with label accounting irregularities. Show all posts

Sunday, 24 April 2011

Adecco admits that accounting irregularities will delay results

18:37 Jas

By Caroline Muspratt 12:01AM GMT 13 Jan 2004
Adecco, the world's largest employment agency, yesterday revealed accounting irregularities that will delay its 2003 results.
The news created waves of concern in a market which is still trying to get to grips with the fraud allegations surrounding Italian food group Parmalat. Shares in Adecco, the Switzerland-based employment services group which has 180 branches in Britain, lost almost half their value on the news before ending the day down 35pc at Sfr53.
Adecco said in a statement that it had identified "material weaknesses in internal controls in the company's North American operations of Adecco Staffing". It also said that there were "possible accounting, control and compliance issues in the company's operations in certain countries". Adecco refused to disclose further details.
The group's auditors, Ernst & Young, also refused to comment. The firm took over as auditor in 2001 from Arthur Andersen, which collapsed as a result of its involvement in the Enron financial scandal.
Ernst & Young is currently the subject of a £2.6 billion negligence suit by Equitable Life, Britain's oldest mutual. The accountants were responsible for the company's accounts between 1990 and 2001 and, Equitable claims, failed to warn the insurer it was heading for collapse over guaranteed annuity rate promises.
Adecco, which is chaired by John Bowmer, is a familiar name in the UK and has more than 40 branches in London. It has 5,800 branches worldwide and claims to find jobs for around 650,000 temporary workers every day.
The company has launched an internal investigation and said its 2003 audited results would be delayed while it takes steps "to address these matters and determine their effect on the company's consolidated financial statements". Adecco did not give a revised date for the publication of its 2003 results, which had been due on February 4.
Investment bank Dresdner Kleinwort Wasserstein downgraded its rating on the stock from buy to sell on the news. "This could be the Olsten deal unravelling," the bank said in a research note, describing the situation as "as bad as it gets".
Adecco paid $1.55 billion (£840m) for Olsten, an employment agency based in the United States, in March 2000. Olsten also operates in the UK and Germany. The lack of details in Adecco's statement raised fears that the problems relate to several overseas operations. Dresdner Kleinwort Wasserstein said: "It stacks up with comments that Adecco will have to look at regions outside the US."
Switzerland-based Bank Leu cut its price target on the stock from Sfr87 to Sfr65 and advised clients "not to touch the shares until more information is on the table".
In 2002, Adecco reported operating profits before amortisation of Sfr662m (£292m), down from Sfr1.18 billion.

AIG admits accounting irregularities

18:22 Jas

From Times Online
March 30, 2005

The scandal-hit American International Group (AIG) has admitted it accounted improperly for a deal with General Reinsurance and is delaying its fourth quarter earnings report for a second time in order to complete a review.
General Reinsurance is a unit of Warren Buffett’s Berkshire Hathaway Group. Yesterday, Mr Buffett sought to distance himself from the transaction, said to be worth around $500 million, after it emerged that the SEC had demanded a meeting with him to discuss the matter. A spokesman for Mr Buffett denied claims that he had personal information about the deal, saying it was his policy to leave operating decisions to individual managers.
"Based on its review to date, AIG has concluded that the Gen Re transaction documentation was improper and, in light of the lack of evidence of risk transfer, these transactions should not have been recorded as insurance," AIG said in a statement.
Earlier this year, AIG said it hoped to report its results by March 31, but now says it hopes to have the report filed by April 30.
The group, which is America’s largest insurance company and a component of the Dow Jones index, said the delay would give its board and new management "adequate time to complete their extensive review" of its books and records.
The company said it wasn’t able to determine if the adjustments identified to date would require a restatement of prior period results or a change to the published results for the fourth quarter of 2004.
But it did say that, "In view of its continuing review, management has not yet completed its assessment of the effectiveness of AIG’s internal control over financial reporting as of Dec. 31, 2004. The assessment will be made prior to the filing of AIG’s Form 10-K."
AIG added, however, that it currently believes the maximum total effect on its consolidated shareholders’ equity would be a decrease of 2 per cent from its previously reported total of $82.87 billion.
Yesterday the company distanced itself further from former long-time chief executive Maurice "Hank" Greenberg.
In a letter to AIG’s board of directors on Monday, Mr Greenberg retired as non-executive chairman, a position he assumed earlier this month after being ousted as CEO. He will not stand for re-election to the board and is expected to formally retire later this week.
Regulators including Spitzer and the SEC are investigating whether AIG used so-called finite risk reinsurance to manipulate its financial statements. The probes precipitated Mr Greenberg’s departure as CEO after almost 40 years in charge of the firm he owns a 16 per cent stake in.
AIG shares fell 1.4 per cent to $57.40 in early trading.

Hong Kong Regulator Seeks Freeze on Assets of China Forestry Executive Li

17:52 Jas


By Debra Mao - Feb 9, 2011 6:19 PM GMT+0800
Hong Kong regulators are seeking to freeze assets of China Forestry Holdings Ltd.’s chief executive officer after he sold HK$398.7 million ($51.2 million) of shares in the company before it disclosed accounting irregularities.
The Securities and Futures Commission asked Hong Kong’s High Court on Feb. 7 to freeze HK$398.2 million of assets belonging to Li Han Chun. The regulator also sought an order restraining Li and his company, Top Wisdom Overseas Holdings Ltd., from dealing in ChinaForestry shares while “in possession of unpublished information about accounting irregularities in the company.”
Shares of China Forestry fell 13 percent after it announced that Li had sold 119 million shares on Jan. 12 for HK$3.35 each. The Beijing-based private plantation forest operator suspended its shares on Jan. 26 and announced five days later that KPMG identified “possible irregularities” in an audit for the fiscal year ended Dec. 31. The SFC didn’t detail in its application the reasons it wants to freeze the assets of Li.
“The freeze order shows that Hong Kong regulators will flex their muscle where investor harm may have occurred,” said William McGovern, a Hong Kong-based partner at law firm Kobre and Kim LLP.
Moody’s Investors Service put China Forestry’s debt on review for a downgrade after the share suspension. The company, 11 percent owned by Washington-based private equity firm TheCarlyle Group, sold $300 million of 7.75 percent five-year notes in November.

Seeking Resolution

Li wasn’t at China Forestry’s Beijing office and couldn’t be reached for comment. “The company is operating normally and board members are actively seeking to resolve the current situation,” it said in an e-mailed statement.
Carlyle’s Beijing-based spokesman, Brian Zhou, said the firm takes the matter seriously and has been in contact with China Forestry’s management. He declined to comment further.
SFC spokesman Jonathan Li said the regulator has no further comment on the court filing. A hearing for the SFC’s application is scheduled for Feb. 11.
The SFC won a court order last March freezing the listing proceeds of Fujian province-based Hontex International Holdings Co. Its investigation of Hontex for disclosing “materially false or misleading” information in its Hong Kong listing prospectus, continues, according to a November press release.
The U.S. Securities and Exchange Commission last year launched a probe of China-based companies listed in the U.S. and their auditors amid concerns that some of those firms may be doctoring their financial statements to attract investors. SEC official Wayne Carnall said the probe has prompted some of the firms to de-register.

Aggressive Regulators

“As Hong Kong competes with New York for the attention of Chinese companies seeking access to the world’s investors, we will likely see the regulators in each market adopt increasingly aggressive tactics,” McGovern, a former branch chief with the U.S. Securities and Exchange Commission, said.
The SFC said last month that disclosure irregularities such as inflated asset values, misstated income statements, and false information about customers and other issues were found in 84 out of 100 applications for share flotation in Hong Kong.
China Forestry, which was listed in Hong Kong in 2009, said in its Jan. 31 statement that it had suspended persons suspected to be involved in the possible irregularities, without identifying the staff.
The company has 229,113 hectares of forests in China, and is amongst the country’s top three private operators, it said on its web site.
The China Council for the Promotion of Environment and Forestry, which it cited, couldn’t be reached for confirmation.
Shares have fallen 18.7 percent to HK$2.95 this year.
“The incident will surely have a very large impact on the company’s share prices,” said Michael Tam, a Hong Kong-based analyst at South China Finance & Management Ltd.
To contact the reporter on this story: Debra Mao in Hong Kong at dmao5@bloomberg.net
To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net