Tianhe's auditor Deloitte takes fraud allegations 'seriously'

Deloitte Touche Tohmatsu said it was taking seriously the latest fraud allegations by Anonymous Analytics against Tianhe Chemicals Group.

"We take the letter seriously as the company's auditor. Client confidentiality obligations prevent us from commenting further," said a spokesman for the Big Four accounting firm.

On Monday, Anonymous Analytics, a group of anonymous analysts, published an open letter to Deloitte as the auditor of Tianhe, a Hong Kong-listed chemicals producer. The letter alleged Tianhe was making false representations and providing falsified information to Deloitte, citing what it said was new evidence.

Anonymous Analytics alleged a tax confirmation which Tianhe obtained from the government of Jinzhou city in northeast China was false because the numbers in that tax confirmation did not tally with corporate filings audited by Deloitte. Tianhe had cited this tax confirmation in its rebuttal of Anonymous Analytics' fraud allegations on October 8.

"If we are correct that Tianhe is a fraud and Deloitte fails to inform investors and regulators of this risk, Deloitte may also be held liable in courts of law and in the court of global public opinion," warned Anonymous Analytics' letter.

"It's the right thing" that Deloitte is taking Anonymous Analytics' allegations seriously, said corporate governance activist David Webb. "If it turns out Deloitte overlooked fraud, that would be a serious problem, but there is no suggestion at the moment that Deloitte has."