Metal recycler inflated figures, SFC says

China Metal Recycling is alleged to have overstated its financial position in its listing prospectus in 2009, said the Securities and Futures Commission, which applied to wind up the company last Friday.

High Court Judge Jonathan Harris yesterday ordered the appointment of Cosimo Borrelli and Jocelyn Chi Lai-man, both of Borrelli Walsh, as provisional liquidators for China Metal Recycling. They were granted wide powers to investigate and manage the company's assets, and suspend the board's powers.

"The provisional liquidators will be undertaking an urgent assessment of the operations of the company and its subsidiaries in consultation with the management," they said yesterday.

But the group's single largest shareholder Wellrun, owned by China Metal Recycling's chairman Jacky Chun Chi-wai, said yesterday that it opposed the SFC's action and "believes this is against the benefits of the group's shareholders". The company had appointed legal counsel.

Meanwhile, sources said the Commercial Crime Bureau arrested two people in connection with the case last Friday. They are now on bail.

The commission alleged the firm, which claimed it was the largest scrap-metal-recycling company on the mainland, inflated its business size and revenue in the listing prospectus and annual report in 2009. It also alleged the purchases from its three major suppliers from 2007 to 2009 were "fictitious."