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Fushun Special Steel Fudged Books - Report

Steel News - Published on Tue, 16 Jul 2019

Image Source: Caixin Global
SCMP reported that as officials from China’s northeast report an improved economic performance, one of the region’s biggest state owned firms has revealed the penalties it received for cooking its books, again throwing a spotlight on the complexity of reviving growth in the country’s rust belt. Shanghai-listed Fushun Special Steel, a “penny stock” company controlled by Dongbei Special Steel, was found to have fabricated its financial numbers on multiple fronts including its inventory, earnings and fixed asset investments between 2010 and the first three quarters of 2017. The company made the disclosure in a statement filed to the Shanghai Stock Exchange, citing an investigation by the China Securities Regulatory Commission.

Owned by the Liaoning government, the steelmaker inflated profit by CNY 1.9 billion (USD 276 million) during that period by exaggerating inventory levels and reducing production costs, according to the statement that gave details of the CSRC findings.

The regulator condemned the company for its “prolonged illegal behaviour, [using] extremely bad means that involved huge amounts, seriously disrupting market order and causing serious losses for investors”.

Fushun was fined 600,000 yuan, while 45 of its executives including former chairman Zhao Mingyuan were named and shamed, and individually fined between 50,000 yuan and 300,000 yuan, the statement said. Zhao and four others were also banned for life from entering China’s capital markets.

The period during which Fushun provided false data overlapped with the four years, between 2011 and 2014, when Liaoning officials were earlier found to have inflated the province’s economic growth numbers.

Fushun’s disclosure last week came after Liaoning posted 6.1 per cent growth in the first quarter of 2019 a level that officials said showed the worst was over for the province, whose economy is the biggest among the three rust-belt provinces, which include Jilin and Heilongjiang.

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Posted By : Ratan Singh on Tue, 16 Jul 2019
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