Sany Heavy Industry, the company run by the richest mainlander, has denied fraud allegations in articles published on the People's Daily website that said the Shanghai-listed firm inflated revenues and profits with the aim of obtaining a listing in Hong Kong because it is desperately short of cash.
The construction machinery maker warned yesterday it might take legal action. The People's Daily website published articles on September 23 and 26, quoting Hong Hao, a mainland academic, alleging Sany may have falsified its accounts.
The allegations were made around the time Sany shelved its HK$26 billion listing, which would have been the city's second-largest initial public offering of shares this year, and amid reports that Sany chairman Liang Wengen may be appointed to senior posts in the central government.
Liang was recently ranked as the mainland's richest man by Forbes, which estimated his personal net worth at US$9.3 billion, pushing him up from third place last year.
The article on Monday was given prominence on the website, but unlike the print version of People's Daily, the website does not necessarily represent the official view of the central government. On Monday, the website quoted Hong as saying that Sany's revenue and earnings per share in the first half - 30.2 billion yuan (HK$36.7 billion) and 0.78 yuan respectively - may have been falsified.
The website identified Hong as a researcher at the Central University of Finance and Economics in Beijing. According to Hong's blog, he also used to go by the name of Zhang Qiang. According to the article on the website, 'Hong discovered that in reality, Sany didn't have much cash flow from sales in the first half. These reported sales may possibly have been generated from the company selling products to itself or false related-party transactions. Hong claimed the motive for fabricating sales is to enable Sany to list in Hong Kong in October to resolve its funding shortage.'