Sounds like more trouble.....
Business Times - 22 Apr 2011
China Gaoxian appoints special auditors as key execs step down
Interim CEO, new CFO named; PwC to work with statutory auditors E&Y
By LYNETTE KHOO
CHINA Gaoxian has launched a special audit as its financial status remains murky, while several senior management executives are stepping down with immediate effect.
PricewaterhouseCoopers has been appointed special auditors to review its financial affairs for fiscal 2010 and the quarter ended March 31.
Pending the results of the special audit, China Gaoxian chief executive and chairman Cao Xiangbin has agreed to step down as CEO, while the board has accepted the retirement of chief financial officer Raymond Wong. Two other executive directors Lau Chung Kong and Liu Yijie also stepped down from the board.
'Although certain additional information has been given to the auditors, such information was incomplete and as such, the auditors were still unable to reconcile the bank balances,' said the Chinese textile maker yesterday.
'Consequently, the auditors remain unable to conclude on the cash and bank balances and the underlying sales and purchases and capital expenditure transactions.'
One of its subsidiaries appeared to have additional bank loans but there is insufficient information for statutory auditors Ernst & Young to ascertain when these bank loans were taken up and how the proceeds have been used.
The special auditors will report their findings on a periodic basis to the audit committee (AC), the Singapore Exchange and the Korea Exchange, while statutory auditors Ernst & Young will work with the special auditors to complete the audit for fiscal 2010, the group said.
Non-executive director Jerome Tham will take over as interim CEO. Chen Guo Dong, who has been assisting Mr Wong since January 2010, has been appointed CFO with immediate effect. He will report directly to Mr Tham and the AC.
Trouble at China Gaoxian started brewing in March, when its auditors could not verify or confirm the bank balances for two Chinese subsidiaries for the fiscal year ended Dec 31, 2010, triggering a trading suspension of its shares.
Other S-chips that recently reported accounting irregularities in rapid succession include Hongwei Technologies, China Hongxing and Sino Techfibre.
China Gaoxian's AC has been in active discussions with Mr Cao since the accounting problem was flagged, the group said.
During the visit by the AC members to the group's subsidiaries, they found that factory operations in Huzhou in Zhejiang province and Fuzhou in Fujian province are still ongoing. The management has also confirmed that there were no disruptions to their operations.
China Gaoxian said that it plans to appoint a new Korean independent director to its board and to reconstitute its board committees.
It has also appointed Rajah & Tann LLP as Singapore legal counsel, Jipyong & Jisung as Korean legal counsel and Tian Yuan Law Office as China legal counsel to advise the board and assist in any legal matters.