Fook Woo (tkr: 923 HK) - Does this Sound Suspicious?

In a recent release (read here) dated 2nd December, 2011, Fook Woo Group announces:

In the course of preparing its interim results for the six months ended 30 September
2011, it has come to the attention of the board of directors of the Company (the
“Board”) on 25 November 2011 (after trading hours) that an amount of RMB 100
million was paid out by a subsidiary of the Company in September 2011 and the
Company has not been able to confirm the remittance with the recipient(s). On 29
November 2011, an equivalent amount was remitted to the Company’s bank account, the
source of which is yet to be ascertained.

In the meantime, there has been several resignations at the Board level.  This is to hoping their auditor, PWC, will take a closer look into the company (not holding my breath though).

Broken Myth of Reputable Sponsors

An excellent article (read here) on Neil Shen of Sequoia Capital, and his involvement in various accounting schemes and related party transactions to dupe public investors.

I can't emphasize this enough, but many private enterprises in China are established for the sole purpose of being taken public.  Many (if not most) VC/PE firms in China are in bed with these private enterprises to add 'credibility' to the IPO.  They want the same thing: (1) exit through an IPO via aggressive accounting (sponsored by complacent accountants and underwriters), and (2) funds raised are eventually siphoned off through acquisitions and related party transactions.

Public investors are duped by the shiny 'brand name sponsors' and are left holding the bag...