Keyuan Petrochemicals (KEYP US)
KEYP was formed via a reverse merger in April 2010 and a simultaneous private placement. Between May 2010 and January 2011, (its first year as a US public company) the SEC alleged that Keyuan systematically failed to disclose in its filings numerous material related party transactions. The related parties included the company’s three founding and controlling shareholders, including its current Chief Executive Officer, entities controlled by or affiliated with these persons, and entities controlled by Keyuan’s management or their family members. The related party transactions included sales of products, purchases of raw materials, loan guarantees, and short term financing. Keyuan also operated an off-balance sheet cash account that was kept off the company’s books by the former Vice President of Accounting. The account was used to pay for various items, including cash bonuses for senior officers and reimbursements to the CEO for business expenses, including travel, entertainment, and rent for an apartment. The account was also used to fund gifts—both cash and non-cash—for Chinese government officials. These issues were discovered by external auditor KPMG.
SEC: Legal Document
, 28 Feb 2013
Casetext: Dragon State Int'l Ltd. v. Keyuan Petrochemicals, Inc.
, 2 Feb 2016
Keyuan Petrochemicals: Annual Report 2011