The Chinese Ministry of Finance has suspended accountants at Hubei Lihua
Accounting Firm, saying the firm fraudulently misrepresented and falsified
various financial reports of four client companies.
One of those involved is Xiangyang Automobile Bearing Co. Ltd. Hubei Lihua
allegedly falsified the company's earnings reports.
The ministry's move is part of a crackdown on what is perceived as widespread
corruption and accounting fraud in companies trading on China's Shanghai and
Shenzhen stock exchanges.
Many investment analysts, however, believe the punishments so far have been too mild
to provide any real stop to the practices.
The Chinese Institute of Certified Public Accountants, along with the Chinese
Ministry of Finance, promise further action and stronger penalties in cases of
accounting fraud and misconduct.
Xiangyang trades on the Shenzhen Stock Exchange and was added to the
Dow-Shenzhen index in October 2000. The market value of the companies
on the Dow-Shenzhen Index
account for 80% of the total market value of the exchange.
The company is China's largest manufacturer of automotive bearings, producing
approximately 23 million bearings per year. Xiangyang is a state-run company,
employing approximately 6,000 workers.