Troubled aluminum giant China Zhongwang Holdings (1333.HK) provoked fresh doubts about its corporate governance by borrowing over US$336 million from two banks in Liaoning and giving the funds to a mysterious company called Hongwei, the South China Morning Post reported. The firm said Hongwei is engaged in construction project investment, and that the funding given Hongwei was intended to "support [Liaoning’s] local development." Zhongwang said it is not responsible for paying the loan off but recorded it on its balance sheet. Zhongwang’s corporate governance was questioned prior to the Hongwei loan when Chinese newspaper The Economic Observer published a report claiming that the 10 top customers Zhongwang claimed in its IPO prospectus had not actually bought anything from the company in 2008. The paper subsequently retracted the report, but questions about Zhongwang’s financial statements persist.
Categories