* Says reported revenue consistent with records
* Finds no evidence to show funds were misappropriated
* Recommends appraisals of co's prodn lines, inventory
* Backs review of pricing of some raw material purchases
Nov 29 Chinese paper company Orient Paper
(ONP.A), which was accused by a Hong Kong-based brokerage of
accounting impropriety, said an internal probe found no
evidence of misappropriation of funds or overstated revenue.
The audit committee started its investigation in July,
after Muddy Waters LLC started coverage of the company with a
"strong sell" rating, and accused it of overstating revenue and
On Monday, the committee said it found the reported revenue
was consistent with bank records and the company's books and
records, cash receipts, and sales invoices.
"From October 2009, the audit committee has not found,
through a review that included company books and records and
bank records, any evidence to support the allegation of
misappropriation of $30 million," it said.
The probe recommended appraisals of all of Orient Paper's
operational production lines as well as inventory, and
retaining an expert to review pricing of some raw material
Earlier this month, Muddy Waters had taken on another
Chinese firm, Rino International RINO.O, accusing it of
fabricating customer relationships. Rino's auditors did find
accounting irregularities. [ID:nSGE6AI0GF]
Shares of both companies lost over half their value since
the charges were made by Muddy Waters, which had a short
position in both stocks.
Orient Paper's shares, however, rebounded 30 percent in two
days after the company said it was "pleased" with the probe
results on Wednesday. [ID:nSGE6AN0GN]
Orient Paper shares closed at $7.10 on Friday. Rino stock
has been halted for nearly two weeks now.
(Reporting by Adveith Nair in Bangalore; Editing by Prem