Today the Shanghai Daily is reporting on China’s refusal to provide the US Securities and Exchange Commission (SEC) documents in an alleged fraud case. And Deloitte and Touche is asking the Court to defend China claiming “that providing them to US regulators would violate Chinese sovereignty and its secrecy laws.”Read the full news report here
An Extract:"The SEC has long been aware that the CSRC (China Securities Regulatory Commission) forbids China-based audit firms to produce audit work papers directly to the SEC, and yet the SEC chose to allow China-based companies to sell securities in the United States despite those restrictions," Deloitte wrote.
Canada’s Prime Minister has recently signed agreements with China he also wishes to be kept secret. The exact details of the Foreign Investment Protection (FIP) agreement is just one.
Recently a Chinese Lumber company trading in Canada and claiming to own massive tracts developing impressive profits demonstrated similar refusals to be transparent.
From Wikipedia;On Thursday 2 June 2011, shares in Sino Forest plummeted following the release of a negative research report by Carson Block of Muddy Waters Research, which made allegations that Sino-Forest had been fraudulently inflating its assets and earnings, and that the company's shares were essentially worthless. Muddy Waters claimed that Sino Forest was a “multibillion-dollar Ponzi scheme” that was “accompanied by substantial theft” Sino Forest rejected the allegations of fraud and launched an independent investigation by PricewaterhouseCoopers. Shares in Sino Forest fell by 82% following publication of the Muddy Waters report, with prominent investor John Paulson selling his entire stake in the company at a $720 million loss.
On June 30, debt rating agency Standard & Poors downgraded Sino-Forest's long-term corporate credit rating from "BB" to "B+". A second downgrade to "B" followed on August 23.
On August 15, Sino-Forest announced that the results of the PwC probe into the allegations would be delayed to the end of the year due to difficulties in gathering data from the Chinese companies involved. The following week, on August 26, the Ontario Securities Commission suspended the shares of Sino-Forest, stating that the company had engaged in practices they “knew or should have known” perpetuated a fraud. The OSC also initially ordered that five directors of Sino-Forest resign, but rescinded this demand a few hours later as the Ontario Securities Act does not allow the commission to summarily force the resignation of a company director without a hearing.
On March 30, 2012 Sino-Forest filed for bankruptcy protection in Canada. It also announced that the company would be sold or restructured, with the proceeds going to its creditors. It also announced that it would sue Muddy Waters for its accusations. However Muddy Waters stated that the actions vindicated its accusations, since the company would not have required filing for restructuring if it was really generating close to $2 billion in cash flow.
From these reports it appears those who have been expressing concerns over the large investments by China and it’s state owned and controlled firms in Canada’s premium resources are somewhat justified.