A few days ago I read the column by financial reporter Jim Jubak on fraudulent accounting at the Chinese corporation Longtop.
Supposedly audited by Deloitte....however....
”The first lesson is that the rules governing Chinese companies that list on U.S. exchanges have a huge loophole. In many cases local accounting firms that are affiliated with the Big Four accounting companies do the actual audits in China.”
”The first lesson is that the rules governing Chinese companies that list on U.S. exchanges have a huge loophole. In many cases local accounting firms that are affiliated with the Big Four accounting companies do the actual audits in China.”
So…local Chinese accountants were verifying phony numbers.
In how many major publicly traded Chinese corporations is this also going on, one wonders?
It is a tale of absolute, utter, and upspeakable madness. Between 1958 and 1962, Mao killed 45 million of his own people in an insane dash to boost steel production. Starvation, murder, abuse, ecological catastrophes, cannibalism…an entire nation turned into a death camp.
An interesting sidelight is that factory and agricultural managers everywhere soon began turning in phony numbers to their superiors to prove how well they were doing. Why? Obviously, to avoid, being purged (i.e. murdered) by their superiors for being right-wing deviationists. Or they tossed sand in the rice or put inferior materials into steel mills–anything to keep up the numbers.
Does this sound familiar?
Today China has Ghost Cities, high-speed railroads that can’t run high-speed trains, processed foods that are intentionally contaminated.
The Great Leap Forward finally collapsed under its own weight–too many were dying. One wonders if today’s Chinese miracle will collapse under the weight of its own phony numbers…
