China Zhongwang listed on the Hong Kong exchange in May 2009. A few months later, in September, a number of newspapers began publishing articles claiming discrepancies in the company's customers and sales. In response, the company engaged Ernst & Young to conduct an independent review. Zhongwang announced that Ernst & Young had found no material deficiencies although the auditor claimed that it had faced external limitations. Zhongwang dismissed these claims. Five years later, in July 2015, short-seller Muddy Waters (under the alias of Dupré Analytics) published a report alleging fraud. Zhongwang was accused of faking sales through undisclosed related parties and of avoiding US anti-dumping tariffs. A 2019 indictment by the US Commerce Department against Perfectus, a US-based company supposedly involved in the fraud, seemed to validate these latter claims. In August 2021, Zhongwang denied that the Chairman owned Perfectus. Later that same month, the company announced that it was unable to complete 1H21 financials on time, resulting in a share suspension in line with Hong Kong exchange listing rules. It is likely that the fraud allegations will be validated.

Last updated 30 August 2021

The information on this page has been compiled from publicly available sources. GMT Research Limited has not verified the information and does not warrant its accuracy. Any claims made or views expressed are not necessarily those of GMT Research Limited.