Drugmaker Kangmei Pharmaceutical Co Ltd, a constituent of MSCI’s global indexes, in April said an “accounting error” led it to overstate cash in 2017 by 29.94 billion yuan ($4.4 billion). This month, Kangde Xin Composite Material Group Co Ltd, a producer of high-polymer materials, said its auditor could find no trace of the 12.21 billion yuan that it said it held in a bank deposit.SCMP: US$369.6 million in defaults at apparently cash-rich firms expose flaws in mainland Chinese auditing practices
Regulators are investigating both cases and neither company has offered detailed explanations for the missing billions.
Weak governance has long been a black mark against mainland Chinese companies. Yet these cases have still stunned many investors as they involve straightforward cash, and because the sheer size of the disappearances is equivalent to more than half the two groups’ combined market capitalization before they disclosed the issues, triggering calls for tougher punishment for any corporate wrongdoing.
...But cash, sitting in bank accounts, is low on that list. Any big-sum cash fraud would be tough to pull off without help from bankers or auditors, said accounting consultant Ma Junsheng.
...Kangde Xin also disclosed a CSRC probe. In a series of statements this month, it said it did not exclude the possibility that its cash was appropriated by controlling shareholder Kangde Group. It is also said it was seeking to sue deposit holder Bank of Beijing Co Ltd.
财新： 巨额存款何以"不翼而飞"
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