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FRAUD

IMM faces fraud claim over 'bogus' customers

Investigators linked to 'hacktivist' collective Anonymous point to two former executives

PUBLISHED : Friday, 12 April, 2013, 12:00am
UPDATED : Friday, 12 April, 2013, 5:43am

Anonymous Analytics has accused International Mining Machinery (IMM), a mainland coal-mining equipment maker formerly listed in Hong Kong, of committing fraud by claiming a customer base Anonymous Analytics describes as bogus.

IMM was delisted in June last year after it was acquired for US$1.4 billion by Joy Global, a US machinery firm listed on the New York Stock Exchange.

"The evidence we have suggests that from its very beginning as a Hong Kong-listed company, IMM was committing fraud," said Anonymous Analytics, a network of anonymous investigators that says it is linked to Anonymous, a group of computer hackers purporting to promote information transparency.

Most of IMM's biggest customers appear to be shell entities set up to transact with it on paper, or related parties owned by IMM employees, the group alleged.

"The addresses listed for most of IMM's largest customers are residential compounds, vacated buildings, or simply do not exist," Anonymous Analytics said.

IMM listed on the Hong Kong stock exchange on February 10, 2010, raising HK$2.54 billion.

Anonymous Analytics drew parallels between IMM's alleged fraud and a case of fraud at Era Mining Machinery, another mainland firm formerly listed in Hong Kong.

Caterpillar, a US heavy equipment maker listed in New York, acquired Era in the middle of last year for US$677 million.

IMM and Era share two former executives: Li Rubo (also known as John Lee) and Emory Williams, who co-founded IMM, according to the firm's documents. Williams is a former chairman of Era. Li is a founding shareholder of Era, The Wall Street Journal Asia reported.

On January 18, Caterpillar issued a press release saying it had uncovered "deliberate, multi-year, co-ordinated accounting misconduct" at Era, for which it would take a US$580 million impairment charge.

IMM's second-biggest customer, Shanxi Guangfa Coal Mining Machinery, is controlled by an IMM manager, and its corporate profile says Shanxi Guangfa is a subsidiary of IMM, Anonymous Analytics alleged.

The address Shanxi Guangfa registered with the State Administration for Industry and Commerce is an empty building in Taiyuan city, Shanxi province, and its address on a mainland industry association's website is a residential flat in Taiyuan, Anonymous Analytics found.

IMM did not reply to inquiries from the Post.

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