Auditors have resigned, Chaoda Holdings says

PUBLISHED : Friday, 11 May, 2012, 12:00am
UPDATED : Friday, 11 May, 2012, 12:00am


Controversy continues to dog Hong Kong-listed investment holding company Chaoda Modern Agriculture (Holdings), which issued a statement last night saying that its auditors had resigned because they were unable to complete their audit.

'On April 26, BDO resigned as Chaoda's auditor,' the statement said. 'The company was very surprised and disappointed with the decision and the reasons for BDO to resign their position.'

In its letter to Chaoda, BDO said that 'despite continuing with the audit for a prolonged period, it was not in a position to conclude the audit'. It also cited risks associated with auditing Chaoda.

Issues requiring attention by the company, BDO said, included the fact it had not yet completely responded to allegations by a blog called Anonymous Analytics it was manipulating its accounts; nor had it answered negative media reports on the company.

In September last year, Financial Secretary John Tsang Chun-wah alleged Chaoda chairman Kwok Ho and Chaoda finance director Andy Chan Chi-po gave insider information about a share placement by Chaoda to George Stairs of US-based Fidelity Management & Research, who then profited by trading on the confidential news. The financial secretary subsequently asked the Market Misconduct Tribunal to investigate Chaoda. On April 27, it issued its report saying it 'was not satisfied that Kwok or Chan engaged in culpable insider dealing'.

Nonetheless, Chaoda said, the operation of the company had been materially and adversely affected 'beyond what is fair to the company and its shareholders' by the tribunal's investigation, Anonymous Analytics' allegations and BDO's 'unexpected resignation'.

Trading in the company's shares have been suspended since September 26 last year.