• Fri
  • Aug 22, 2014
  • Updated: 9:56am

Citic Pacific

CITIC Pacific (Hong Kong stock code 0267.HK) is a Hong Kong-based conglomerate which is majority owned by China’s Citic Group in Beijing. Its activities span property, metals and mining, telecoms, and consumer products and its subsidiaries include CITIC Pacific Mining, CITIC Pacific Special Steel and Dah Chong Hong Holdings.

BusinessCompanies
RESOURCES

Mineralogy chief attacks Citic Pacific auditor swap

PUBLISHED : Monday, 08 April, 2013, 12:00am
UPDATED : Monday, 08 April, 2013, 3:17am

Australian tycoon Clive Palmer, who is in a court dispute with Citic Pacific over iron ore royalty liabilities, has said the conglomerate's recent decision to swap external auditors for the first time in more than 25 years raises questions about its transparency.

Hong Kong-listed Citic Pacific, the steel-to-property flagship of Beijing-backed conglomerate Citic Group, said last Tuesday that its board has proposed to its shareholders that KPMG be appointed as its auditor, replacing PricewaterhouseCoopers.

Citic Pacific did not say why PwC will be replaced, but said the appointment of KPMG would "enhance the efficiency of the audit process", given that "a number of [its] subsidiaries have been audited by KPMG for many years". There was no disagreement between PwC and Citic Pacific, it added.

The allegation by Palmer's mineral resources exploration and development firm Mineralogy, which signed an agreement in 2006 to sell Citic Pacific the right to mine up to six billion tonnes of iron ore in the state of Western Australia, is its second attack on Citic Pacific in two weeks.

"Why sack the auditor," Palmer asked in a statement yesterday. "Is it because the auditors required them to list their debt to us as a current liability in the [annual report]?"

A Citic Pacific spokesman refused to comment on the matter.

On March 26, Palmer said Citic Pacific was trying to avoid royalty payments because it was in financial difficulty. A spokesman for Citic Pacific said at the time: "Mr Palmer's sense of humour is a known quantity."

Besides resources development, Palmer is known for his plan to build a modern-day replica of the ill-fated passenger liner Titanic in a mainland shipyard.

Citic Pacific's 2012 annual report books a HK$1.52 billion provision on its mining rights under current liabilities - items payable within a year.

Citic Pacific said on March 22 the provision was made on a potential liability related to a royalty payment. According to the 2006 agreement, if either of two subsidiaries of Citic Pacific failed to produce at least six million tonnes of processed iron ore by March this year, each would have to pay royalties on the raw ore required to produce six million tonnes of processed ore.

Citic's iron ore project in Australia has been delayed by three years, hence its failure to produce iron ore.

On March 18, Mineralogy launched a lawsuit against Citic Pacific, seeking royalties of around HK$1.58 billion.

It is unclear whether Citic Pacific's change of auditor is related to Beijing's stipulation that central government-administered state firms should change auditors at least once every five years.

Citic Pacific is a Hong Kong-registered "red-chip" firm, 57.5 per cent-owned by Citic Group.

Li Ka-shing's flagship Cheung Kong last year replaced its auditor Deloitte Touche Tohmatsu with PwC, citing better efficiency, consistency and timeliness as reasons for the change.

Share

Related topics

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

 
 
 
 
 

Login

SCMP.com Account

or