Kong Tai to clear Vigers over report
KONG Tai International Holdings Co is expected to announce today that the error which appeared in its annual report was not the fault of valuer Vigers Hong Kong.
The unusual mistake, in which the value of two properties was overstated by $226 million, triggered an investigation by the stock exchange and the Securities and Futures Commission.
On Tuesday the property investment company said the error arose from Vigers' evaluation and it was not uncovered until a restructuring exercise in October last year.
Vigers executives said Kong Tai's claim was damaging and they had requested a statement from its management.
The valuer originally planned to clarify its role in the controversy yesterday but decided a statement from Kong Tai would be more appropriate.
A Vigers director said: 'If Kong Tai does not issue the statement tomorrow (Friday), we will act on our own and probably sue them.' Vigers has from the beginning said that in its role as valuer it has provided the gross development value and site value figures to the company.
It said this was clearly stated in the valuation certificate and was presented to the two regulatory bodies in their inquiries.
Sheen Profit Centre, a commercial building in Tai Kok Tsui, should be valued at $90 million instead of $166 million, while Golden Castle Industrial Building, in Tuen Mun, should be valued at $125 million, instead of $275 million in the report for the year to March 31 last year.
Although transactions of the two properties would not be affected, profit from the deals would be significantly reduced.
Meanwhile, the Hong Kong Society of Accountants has not published its findings on the controversy.
Deloitte Touche Tohmatsu audited Kong Tai's accounts.
An accounting source said auditors, in their prudence, would generally recommend their clients to use the site value figure, which was the market value.
He said a gross development value, which is usually double that of the site value, would only be used if a redevelopment was in consideration.
In a separate development, speculation surrounding listing candidate RBI Holdings grew as briefings to promote the offering of shares in the company were postponed.
The company said it was optimistic about its impending flotation despite its underwriter Lippo Asia coming under the regulatory spotlight.
Being the sponsor and the main underwriter of Iwai's International Holdings, Lippo has been plagued by troubles due to the stock exchange's investigation into Iwai's.
The exchange is looking into the vast discrepancy between Iwai's sharply reduced interim results and its forecast of year-end operating profit in the listing prospectus.
RBI founder Yip Yun-kuen said: 'Lippo Asia has underwritten numerous new listings, of which there must be some good or bad ones.
'Iwai's is a separate issue which does not have any lingering effects on our listing.
'Despite this, we will not change our underwriter. We trust Lippo Asia and are confident about the company.' It is said that Lippo is the only underwriter and sponsor of RBI's share offering.