* Anonymous allege Chaoda management siphoned money out of
* Chaoda facing lawsuit from HK Market Misconduct Tribunal
* Anonymous says to release more reports on corporate fraud
* Anonymous has indirect interest in Chaoda share price
By Rachel Armstrong
SINGAPORE, Sept 27 An online activist group has
alleged the management of Chinese fruit and vegetable producer
Chaoda Modern Agriculture (Holdings) Ltd , already
under investigation in Hong Kong for market misconduct, has
defrauded the company of more than $400 million.
Anonymous Analytics, which says it is a faction of cyber
hacking group Anonymous, has published a 38-page report accusing
the company of misleading investors about its cash holdings,
capital expenditure, and falsifying its financial statements.
On Monday, before Anonymous published their report, Hong
Kong's government confirmed the city's Market Misconduct
Tribunal was investigating Chaoda although declined to give any
further details. The news of that investigation sent Chaoda
shares tumbling more than 26 percent before they were suspended
Chaoda's shares are already down around 76 percent since
late May, when it was accused in Chinese-language Next Magazine
of overstating the size of its farmland in Beijing, Hebei,
Tianjin and Fujian.
The company denied all of those allegations and brought back
some of its own shares after the report caused its stock to drop
In the latest report, Anonymous claimed Chaoda management
had siphoned out about 2.3 billion yuan ($360 million) from the
company under the guise of capital expenditure.
Anonymous also alleges that Chaoda's main fertilizer
supplier, Fujian Chaoda Trading, which Chaoda chairman Kwok Ho
has a majority stake in, is in fact a shell company used to
smuggle money out of the company.
"Under the cover of inflated capex spending and related
party transactions, management has transferred more than $400
million out of Chaoda," the report concluded.
Eric Yip, a spokesman at Chaoda's public relations agency,
said the company is looking at the report and may issue a
clarification statement later. On Monday, the company said its
shares were suspended from trading pending the release of price
A string of Chinese companies listed in North America have
been accused of fraud by investors which held short-positions in
their stock. This, however, is the first major report of this
kind issued on a company listed on the Hong Kong stock exchange.
Anonymous, better known for hacking government and company
websites, said it plans to release more reports exposing
companies it claims are fraudulent.
Anonymous disclosed that it has an indirect interest in a
fall in Chaoda's share price due to short positions held by its
"associates, partners, affiliates, consultants, clients, and
other related parties".
According to Thomson Reuters data, Blackrock Financial
Management Inc held a 4.3 percent stake in the company
as of September 14 while Janus Capital Management was recorded
on March 22 as having an 8.13 percent holding.
Chaoda, which listed on the Hong Kong stock exchange in
2000, says on its website that it has more than 44,282 hectares
of farmland at 31 different production bases across China. It
said it grew and sold 2.7 million tonnes of fruits and
vegetables in 2010.
($1 = 6.389 Chinese Yuan)
(Editing by Lincoln Feast)