With the words barely out of Li's mouth, another company, Global Green Tech Group (GGT), was suspended yesterday for unspecified reasons. The company's website, which displays its stock code incorrectly as 247 instead of 274, says it develops and manufactures skin care and beauty products under the brand name Marjorie Bertagne, and sells through a sales network in Greater China.

The company also says it manufactures and sells household products, industrial fine chemical products and biochemical products in mainland China, and engages in the green energy recycling business. The firm had a relatively small market capitalisation of HK$455.5 million at the time of its suspension.

Its share price has been spectacularly poor in recent months, dropping from the lofty heights of HK$0.295 in September last year to HK$0.087 - a decline of 70.5 per cent. GGT's suspension could be related to a complaint sent to the Securities and Futures Commission earlier this week by the indefatigable shareholder rights activist and editor of webb-site.com, David Webb.

His complaint relates to a notice that GGT sent to the stock exchange earlier this week. The notice outlines an unfortunate set of circumstances whereby the company says it has lost control of its main assets after pledging GGT shares as collateral for a HK$60 million loan to a company called Sino Measure.

When GGT defaulted, Sino Measure took control of the company's main subsidiaries within a few months. The notice tells us little about Sino Measure, calling it 'a company incorporated and registered in the British Virgin Islands'. There is no information about what the company does, where it is located or who controls it.

This does not rule out the possibility that it is a shell company set up to handle the loan.

Webb's complaint draws attention to the lateness of the disclosure of the loans, noting they have been in default since January this year, but the company informed its shareholders only recently.

He also says that there is no mention in GGT's 2010 accounts of land pledges, or pledges over shares.

Webb notes: 'It appears that the audited accounts were false and misleading in a material respect - the non-disclosure of secured non-bank borrowings and the securities granted, and the fact that between the year-end and the end-of-the-year accounts (a post-balance-sheet event) a loan had been called in default by the lender.'

One of the problems with Hong Kong-listed mainland companies is that it is easy to put a firm into liquidation to escape creditors, and then to buy the assets back cheaply from the liquidators. There is no evidence so far that that happened in this case, but other situations have started off in a similar manner.

Webb has written extensively about this firm on his website, identifying a litany of dubious transactions that do little to inspire confidence. We anticipate a lengthy suspension.

If Charles Li doesn't retract what he said in the US and recognise that his own backyard is not exactly smelling of roses, he's going to end up choking on those words.

Citi's headline woes continue

Oh dear - Citi is attracting unwelcome headlines. We see that a former vice-president was arrested after landing in New York from Bangkok and was charged with embezzling US$19 million from the company's accounts. This comes a few weeks after it emerged that Hong Kong's Securities and Futures Commission (SFC) was investigating a former Citigroup adviser who fled Hong Kong for India, after allegedly misleading investors with claims that he could guarantee annual returns of up to 18 per cent.

In addition, Citigroup's internal controls are being scrutinised by the SFC as part of an investigation into why it didn't detect the misconduct. This follows what was presumably a more detailed scrutiny of Citi's internal controls in the US, which prompted scathing SEC comment.