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This May Be The Greatest "Explanation" Ever For Cooking The Company's Books

Tyler Durden's picture




 

According to its website, Beijing-based China Animal Healthcare "is a leading animal drug manufacturer focusing on the manufacture, sale and distribution of compound chemical drugs (comprising powdered drugs and injection drugs) and biological drugs (comprising Mandatory Vaccines and non-Mandatory Vaccines) for poultry and livestock in the PRC."

It adds that "as a value-added service, we provide technical and support services such as farming techniques and methodologies and impart knowledge relating to animal health and treatment of animal diseases to both select retailers who meet their sales target and retailers with sales potential."

It almost certainly does none of that; instead the company is merely the latest run off the mill Chinese corporate fraud, although this one is truly hilarious.

More to the point, the publicly traded, or rather not publicly traded company, has had its shares - which quadrupled from mid 2013 to late 2014 - suspended since March 30, pending the release of its still-undisclosed financial results for 2014.

 

To those hoping for a lift to the stock trading suspension, or a presentation of the financial results, we have bad news: both will never happen.

As the WSJ reports, in September accounting firm Deloitte Touche Tohmatsu resigned as its auditor, saying the firm alleged misconduct by a China Animal Healthcare employee and that the two firms disagreed on bank balances.

Then in October, the company announced that local authorities in Hebei province revoked some of its production permits and manufacturing certificates over local safety and environmental concerns. They also asked that the company relocate some facilities away from residential areas.

In short: the company's business and fraudulent operations were in freefall, the management team is likely facing arrest or worse, and as such the opportunity cost to come up with absolutely ridiculous stories to justify what will emerge as corporate fraud, is low.

So low in fact, that the result was nothing short of today's, if not this year's, most entertaining story of corporate fraud and may enter the history books as the most ridiculous official explanation for why it was cooking its financials.

The "explanation", as it turns out, would make even the IRS' Lois Lerner blush.

Fast forward to Monday when, as @WallStCynic points out, China Animal Healthcare said in a statement to the Hong Kong stock exchange that a truck loaded with four years’ worth of its original financial documents was on its way to Beijing. However, while the truck driver was taking a lunch break, the truck was stolen. One week later the truck was found... but the four years of financial documents were gone.

A driver sits in his truck in Hebei province, China. Bloomberg News

“The possibility of finding the Lost Documents is not high,” the company said in the filing, conveniently adding that local police told them such thefts were common in Qingyuan.

And that's how the only set of the company's "original financial documents" disappeared forever.

* * *

That was the summary. The details, as laid out in the full filing, have to be read ideally in as deadpan a voice as possible, to be believed. The full excerpt from the linked filing follows:

The board (the “Board”) of directors (the “Directors”) of the Company wishes to inform the shareholders of the Company (the “Shareholders”) that on 4 December 2015, a truck of the Group (the “Truck”) loaded with, among other things, all original financial documents of the Group for the four financial years ended 31 December 2014 and for the current year (the “Lost Documents”) were stolen in the Qingyuan District of Baoding City, Hubei Province, China while the truck driver was taking a lunch break on his journey to transport the Lost Documents back to the Group's head office in Beijing (the “Incident”).

 

The Lost Documents were originally stored in the Group's office in Shijiazhuang, being the document storage centre of the Group. On 3 December, the Group made arrangements to transport the Lost Documents back to the Group's head office in Beijing for collation in order to facilitate, among other things, the Forensic Investigation. At around noon of the same day, the Truck broke down and was towed to a car repair garage in Qingyuan District for repair. On 4 December at around 11:30 a.m., the driver of the Truck picked up the Truck from the garage after repair and went for lunch at a nearby restaurant. The Truck driver discovered after lunch that the Truck was stolen.

 

Immediately after the Incident took place, the Group made a report to the local public security bureau and sent staff to search for the Truck in the direction the Truck had gone according to the road monitoring system of the local public security bureau. Given the gravity of the Incident, the Group convened a meeting on 5 December 2015 with the driver of the Truck and other relevant personnel of the Group to inquire further into the Incident, as well as set up a special investigation group (the “SIG”) accountable to the Board which is headed by Mr. Li Jun, an executive Director, to (i) investigate into the Incident, (ii) maintain close contact with the local public security bureau to search for the Truck, and (iii) confirm the list of Lost Documents and follow up on this matter.

 

Based on the findings of the investigation by the SIG, no suspicious person has been identified in the Incident. According to the local public security bureau, thefts such as the Incident are common occurrence in the Qingyuan District.

 

On 12 December 2015, the Company was notified by the local public security bureau that the Truck was found but not the Lost Documents. As at the date of this announcement, although the possibility of finding the Lost Documents is not high, the Group has nonetheless deployed all possible resources in search of the Lost Documents. Since the occurrence of the Incident, the finance team of the Group has been actively inquiring from different sources to retrieve as many copies of the Lost Documents as possible in order to minimise the impact of the Lost Documents. At the same time, the management of the Company has communicated to the Forensic Accountant on the Lost Documents, so as to minimize the impact on their work. Further investigation by the SIG of the Incident is currently in progress. The Company will publish further announcement(s) to update the Shareholders when there is further development on the Incident.

We eagerly await comparable the-truck-with-all-the-financial-documents-was-stolen excuses (the "excuse") to emerge in the US, once the stock market tide finally goes out.

 

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Tue, 12/29/2015 - 18:07 | 6975602 KesselRunin12Parsecs
KesselRunin12Parsecs's picture

The dog ate Hilary Clinton's e-mails then stole this truck.

Tue, 12/29/2015 - 18:08 | 6975608 Tyler Durden
Tyler Durden's picture

The dog stole the truck transporting Hillary Clinton's emails. The truck was found afterwards but the emails were gone. According to the local public security bureau, dog thefts such as the incident are common occurrence.

Tue, 12/29/2015 - 18:10 | 6975609 KesselRunin12Parsecs
KesselRunin12Parsecs's picture

lol

Tue, 12/29/2015 - 18:21 | 6975616 Looney
Looney's picture

Speaking of China... ;-)

There’s an interesting article in The European Union Times:

Obama’s “Worst Nightmare” Realized As Chinese Troops Flood Into Syria

In what a new Ministry of Defense (MoD) report circulating in the Kremlin today is describing as President Barack Obama’s “worst nightmare”, the Ministry of National Defense (MoND) of the People’s Republic of China has secured the permission of the Syria Arab Republic to begin “flooding” into the Levant War Zone up to 5,000 of its most elite military forces, and which will first include the feared Shenyang Military Region “Siberian Tiger” Special Forces and Lanzhou Military Region “Night Tiger” Special Forces Units.

It would be lovely to watch the Crouching Tiger going “Crazy-ass Monkey” in Syria! ;-)

Looney

Tue, 12/29/2015 - 18:27 | 6975661 Save_America1st
Save_America1st's picture

Hitlery reads the story, then furiously bitch-slaps Huma across the face..."Bitch, why didn't you think of that before the f@cking Chinese did!!??"  ;-)

Tue, 12/29/2015 - 18:36 | 6975685 God
God's picture

Sounds like Trump is running this company?

Tue, 12/29/2015 - 21:27 | 6976303 insanelysane
insanelysane's picture

I would have believed them if they said they sent the documents by boat and the boat sank but I'm not buying the stolen truck story.

Wed, 12/30/2015 - 01:46 | 6977122 StychoKiller
StychoKiller's picture

Guess you don't comprehend just how much financial docs fetch on the black market! WTF, just WHO in China is believin' any of this??

Tue, 12/29/2015 - 21:46 | 6976366 HamSandwich
HamSandwich's picture

More like "The truck containing Secretary Clinton's E-Mails was found, dead, on the side of the road without any of the E-Mails inside. The truck had a bullet hole in the back of its head, its axles chained and steering wheel clubbed, - officials have deemed it as an apparent suicide. Secretary Clinton's office released a statement expressing remorse over the tragedy, and sympathy for the manufacturer."

Wed, 12/30/2015 - 08:29 | 6977579 onthesquare
onthesquare's picture

Building #7 was pulled.

Building #7 held all the FBI and CIA documents and all was destroyed in 9/11

 

Tue, 12/29/2015 - 18:12 | 6975625 undercover brother
undercover brother's picture

the chinese copy everything from the american's, even ridiculous lies.  

Tue, 12/29/2015 - 19:13 | 6975675 oddjob
oddjob's picture

Valeant, then Biovail, tried this truck snafu 12 years ago, this is another copy.

Tue, 12/29/2015 - 18:18 | 6975637 boattrash
boattrash's picture

That dog ate my tax filings, all the way back to '06.

Tue, 12/29/2015 - 19:27 | 6975854 God
God's picture

I was watching you on my webcam and I was thinking "man, boattrash really has a nice tight ass". Can you get up again in front of the camera so we all can see?

Tue, 12/29/2015 - 20:20 | 6976089 boattrash
boattrash's picture

Good trick, especially since my cam is taped over.

If looking at another man's hairy ass is what turns you on though, maybe you can learn to use that interweb thingy (what with all your omnipotent wisdom and such). Sure you can see some man-ass there, providing you get the cock & balls outta your face first.

Sincerely,

Boattrash

Tue, 12/29/2015 - 18:27 | 6975665 RU4Au
RU4Au's picture

A truck? I was expecting to read about an unfortunate boating accident.

Tue, 12/29/2015 - 18:35 | 6975683 NotApplicable
NotApplicable's picture

Looking at that Bloomberg picture of a truck driver, it seems legit to me.

Tue, 12/29/2015 - 18:38 | 6975689 KesselRunin12Parsecs
KesselRunin12Parsecs's picture

I think I remember seeing that dude at Sandy Hook & the Boston Marathon.

Tue, 12/29/2015 - 19:28 | 6975862 God
God's picture

israel joos will stoop to any level to make some joo bucks.

Tue, 12/29/2015 - 18:31 | 6975671 Normalcy Bias
Normalcy Bias's picture

It sounds like the same breed of dog that keeps stealing boxes of straight ticket Democrat ballots and hiding them in the trunks of cars, only the ballots are magically rediscovered just in time for the recount.

Tue, 12/29/2015 - 18:38 | 6975694 NotApplicable
NotApplicable's picture

Well, it's not like just anyone can get the Diebold password, ya know. Otherwise, Anonymous would've already elected Marblecake.

Also, the game.

Tue, 12/29/2015 - 20:19 | 6976087 toady
toady's picture

Exactly. People are pretty stupid if they believe "documents" are written on paper and driven around in a truck. What, are they stuck in the 50's? 

Tue, 12/29/2015 - 20:38 | 6976151 Sanity Bear
Sanity Bear's picture

the dog was later found hanged by the door of one of Bill's exes to insure her compliance with reasonable requests

Tue, 12/29/2015 - 18:14 | 6975628 Fuku Ben
Fuku Ben's picture

Replace the word "Truck" with "Gold" and we'll all be hearing a very similar corporate (government) story soon.

Tue, 12/29/2015 - 18:15 | 6975632 Fester
Fester's picture

I'll bet the stock holders wished they had thier own CEDE.

Tue, 12/29/2015 - 18:10 | 6975612 CHoward
CHoward's picture

Me thinks the truck driver had a very very nice Christmas. 

Tue, 12/29/2015 - 18:16 | 6975635 Fester
Fester's picture

Until he disappeared. No loose ends allowed.

Tue, 12/29/2015 - 18:11 | 6975613 aerohelo
aerohelo's picture

The same thing used to happen to my algebra homework.

Tue, 12/29/2015 - 18:11 | 6975614 undercover brother
undercover brother's picture

how ironic there are no backup hard drives or copiers in china.  

Tue, 12/29/2015 - 18:32 | 6975674 NotApplicable
NotApplicable's picture

Obviously no scanners, email, or even fax machines.

This is not the Great Leap Forward you were looking for. He can go about his business. Move along now.

Tue, 12/29/2015 - 19:23 | 6975840 logicalman
logicalman's picture

The back ups were in a building that the BBC said had collapsed while it was still visible in the background.

Tue, 12/29/2015 - 18:12 | 6975615 Sudden Debt
Sudden Debt's picture

And what are OTC stocks again?

Tue, 12/29/2015 - 18:57 | 6975746 optimator
optimator's picture

Go to Penny Schloks dot com.  I go there for laughs.  the last one I looked at went from .85 cents to one cent in less than a year.

Tue, 12/29/2015 - 18:11 | 6975619 Agent P
Agent P's picture

Safer than keeping electronic copies of all those financials....imagine if they were hacked! 

Tue, 12/29/2015 - 18:11 | 6975620 Quasi
Quasi's picture

Wait wait wait.... a Chinese company used a Japanese accounting firm? That should have been the red flag.

Tue, 12/29/2015 - 18:14 | 6975629 Agent P
Agent P's picture

China is a red flag....literally 

Tue, 12/29/2015 - 18:15 | 6975633 KesselRunin12Parsecs
KesselRunin12Parsecs's picture

ritterrary!

Tue, 12/29/2015 - 18:19 | 6975641 RogerMud
RogerMud's picture

I've got no truck with this...

We are all familiar with trucks as carts and road vehicles, but that's not what's being referred to in 'have no truck with'. This 'truck' is the early French word 'troque', which meant 'an exchange; a barter' and came into Middle English as 'truke'. The first known record of truke is the Vintner's Company Charter in the Anglo-Norman text of the Patent Roll of Edward III, 1364. This relates to a transaction for some wine which was to be done 'by truke, or by exchange'.

Tue, 12/29/2015 - 18:25 | 6975660 KesselRunin12Parsecs
KesselRunin12Parsecs's picture

In England, a truck is a 'lorry'

Tue, 12/29/2015 - 18:40 | 6975699 WTFUD
WTFUD's picture

In Japan lorry is rorry!

Tue, 12/29/2015 - 18:50 | 6975733 I AM SULLY
I AM SULLY's picture

(another duplicate)

Tue, 12/29/2015 - 18:50 | 6975734 I AM SULLY
I AM SULLY's picture

In England a Rorry is a guy you pick-up at a gay bar.

Tue, 12/29/2015 - 18:55 | 6975745 KesselRunin12Parsecs
KesselRunin12Parsecs's picture

& a fag is a cigarette

Tue, 12/29/2015 - 19:51 | 6975958 ghengis86
ghengis86's picture

In the U.S. a fag is the president.

Tue, 12/29/2015 - 19:24 | 6975844 logicalman
logicalman's picture

In England, if you see a sign saying Dodge Trucks it's just good advice!

 

Tue, 12/29/2015 - 18:34 | 6975676 WTFUD
WTFUD's picture

No matter what/which 'worse case scenario' you can imagine, it's worsererer out there in never never land. Anyone for tiffin? I'm hungry!

Tue, 12/29/2015 - 18:41 | 6975704 are we there yet
are we there yet's picture

In China suspicious company presidents may dissappear and undergo enhanced interrogation until the missing unicorns are found.

Tue, 12/29/2015 - 18:54 | 6975739 cpnscarlet
cpnscarlet's picture

On the subject of "They're all crooks..." -

Just went to see "The Big Short". For ZHers, a

MUST SEE

MUST SEE

MUST SEE

MUST SEE

MUST SEE

Tue, 12/29/2015 - 18:55 | 6975742 orangegeek
orangegeek's picture

LMFAO!!! Chinese drug company???

 

I need to get my prescription of panda bear toenails filled.  WTF???  My bengal tiger eyelashes prescription is running low too.  FAWK!!!

Tue, 12/29/2015 - 19:12 | 6975806 itstippy
itstippy's picture

Jon Corzine's explanation for the whereabouts of customers' segregated accounts is still the winner.

"There's no saying where the money went - it was just vaporized."

"Vaporized?"

"Yes, vaporized."

Tue, 12/29/2015 - 19:14 | 6975814 Kagemusho
Kagemusho's picture

Honestly, Teacher, the dragon ate my homework!

Tue, 12/29/2015 - 19:26 | 6975851 YesWeKahn
YesWeKahn's picture

I've got the "documents". These are blank pages. I gave them to the school kids so that they can do home work.

Tue, 12/29/2015 - 19:43 | 6975927 Bruce Gender
Bruce Gender's picture

Ho Lee Fuk

Sum Ting Wong

Wei Too Lo

Wed, 12/30/2015 - 01:49 | 6977131 StychoKiller
StychoKiller's picture

Yu Sik Fuk!

Tue, 12/29/2015 - 21:30 | 6976311 insanelysane
insanelysane's picture

Were they running an all cash business?  Wouldn't a bank have the deposits and withdrawals and current balance of their accounts?

Tue, 12/29/2015 - 22:24 | 6976490 Crush the cube
Crush the cube's picture

Unfortunately the thieves transferred the load to another truck which was last spotted traveling north in a heavy convoy just a few clicks south of the Turkish border, and than there was a fire.

Tue, 12/29/2015 - 23:29 | 6976770 TEOTWAIKI
TEOTWAIKI's picture

Well, teacher, I know this sounds far-fetched but:

A Boeing 757 flew in through the door of my house last night,

exploded and vaporized my dog, the neighbors AND my homework.

Wed, 12/30/2015 - 06:29 | 6977452 trader1
trader1's picture

a bigger news story is chinese animal cloning factories: http://www.theguardian.com/world/2015/nov/24/worlds-largest-animal-cloni...

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