Zhongwang says prospectus cleared

China Zhongwang Holdings, the mainland aluminium producer that was accused by the media in September of falsifying its initial public offering prospectus, says an independent audit firm has given its share sale document a clean bill of health.

After the China Economic Observer said, in a report it later retracted, that Zhongwang had falsified its customer information, the firm posted a stock exchange announcement yesterday saying Ernst & Young, hired to perform the audit, had found 'no deficiencies' in data pertaining to its top 10 customers.

The Liaoning-based company, which raised HK$9.8 billion in its April Hong Kong flotation, making its chairman Liu Zhongtian China's eighth richest man, said Ernst & Young had examined sales data relating to its top 10 customers from January 2008 to June 30, 2009.

Zhongwang's shares closed up 7.2 per cent yesterday at HK$7.02. They have slumped from a high of HK$10.42 in mid-July.

The company did not make the report public despite its finance director, Vincent Cheung, telling an investor meeting on November 10: 'We appointed Ernst & Young to give [the] result to media, investors and [the] market.'

In its announcement yesterday, Zhongwang said the auditors found 'no deficiencies' in its customer sales or income tax data. It added another accounting firm, Beijing-based Moores Rowland, had reviewed its internal controls and identified no 'material operating effectiveness'.