Indonesian pulp and paper company Asia Pulp and Paper listed on the New York Stock Exchange in 1995. The company was pursuing an aggressive debt-fuelled expansion into China as the 1997 Asian financial crisis unfolded. Whilst it appeared to be an initial beneficiary of Asian currency devaluations, falling pulp prices were putting financial performance under pressure by 1999. Following substantial share price declines, the company announced a moratorium on its US$13.9bn of debt in March 2001. Shortly thereafter, it disclosed an unreported US$220m loss from two swap contracts dating to 1997. The company's financial statements had traits similar to past fraud but owing to the lack of a forensic report, we cannot say for sure if the company was inflating profits beyond the omission of losses relating to the swap contract. 

Last updated February 2022

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