Huabao was the product of a 2004 reverse takeover (RTO). In April 2012, it was attacked by short-seller Anonymous Analytics alleging fraud. Huabao was accused of faking profits and inflating its share price in order to enable the chairwoman to sell down her stake, netting over US$1bn in the process. The company refuted these claims and highlighted its high dividend payments which would not be possible if the company was a fraud. However, half of these dividends went back to the chairwoman through her shareholding. Huaboa has subsequently come under criticism for being an example of how RTOs do not create value minority investors. Given that the company has managed to retain PwC as its auditor throughout, the fraud allegations remain unproven. 

Last updated September 2021

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