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ITAT Is Accused Of Temporarily Freezing Accounting Fraud To Hong Kong

2008/8/16 17:32:00 22

ITAT Group Ltd., a mainland clothing retailer, originally planned to raise $1 billion in Hongkong's stock market was temporarily frozen.

According to foreign reports, a person familiar with the matter said that the reason for the freeze was that the company was reported to be accounting fraud.

The ITAT group, originally scheduled for listing in March this year, should be ranked third in the HKEx's IPO scale this year. The former Underwriters were the famous Goldman Sachs Group and Merrill Lynch.

At the same time, Merrill Lynch also invested in the clothing retailer in advance, hoping to profit from the dual identities of investors and underwriters.

In fact, not only Merrill Lynch, including Morgan Stanley's Morgan Stanley Principal Investment, Blue Ridge China Partners LP and Citadel Investment Investment are also the former investors of this company.

However, the ITAT group accounting scandal, the former investment bankers will have to face embarrassment.

In fact, it is the banks who are preparing for listing for ITAT group.

Analysts found that although the company's sales performance is good, but the sample survey chain stores lack operational vitality.

On the other hand, an anonymous letter of reporting the ITAT group's reporting purpose was also sent to the Hongkong stock exchange.

The letter details the improper operation of ITAT, including false sales volume.

After receiving the report, the HKEx asked the Underwriters and auditors of the ITAT group to investigate the related allegations.

Goldman Sachs has hired a third party organization to investigate the sales performance of ITAT's chain stores in the mainland's second tier cities, and other banks have also investigated ITAT related issues.

Several banks acting as underwriters found that the actual sales volume of ITAT chain stores was not consistent with the huge sales volume reported.

According to people familiar with the matter, after Goldman told ITAT that its analysts could not follow ITAT's pace, ITAT broke the contract with Goldman Sachs.

Almost at the same time, Merrill Lynch also gave up this single business.

As the auditor of the ITAT group, KPMG (KPMG) is investigating the allegations of anonymous letters, but has not yet completed the investigation report on the legality of ITAT accounts.

Despite allegations of "accounting fraud" in the ITAT group, "IPO is still in the process of implementation", but people who know about the ITAT group's listing will not be able to list in the year.

Prior to this, the Hong Kong Stock Exchange listed members held the first hearing, and the company's business and lease contracts were raised.

At present, the HKEx has not yet held second hearings to hear ITAT's interpretation of the allegations.