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China

Sinovel investigated by securities commission

CHINA: Sinovel is being investigated by the China Securities Regulatory Commission over alleged securities violations.

Sinovel under investigation by securities commission
Sinovel under investigation by securities commission

Sinovel said it received a notice of China Securities Regulatory Commission's (CSRC) investigation on 29 May. Sinovel and CSRC would not elaborate on details.

Industry insiders said it was related to the exaggerated profit report of 2011.

This follows on from 11 April, when the CSRC Beijing Bureau handed Sinovel an official document demanding the company take measures to correct its accounts.

The original issue was first revealed on 6 March when Sinovel released a statement to correct errors in the financial report of 2011, covering owners' equity, operating revenues, operating costs and net profits.

According to the correction, Sinovel made a false report of its performances of 2011 and needed to remove CNY 929 million ($150 million) from the CNY 10.4 billion operating revenues.

Sinovel explained this was a result of self-examination, and the errors were made by miscalculating incomes from projects in which turbines were not installed by the end of 2011, meaning the incomes should be counted for 2012 instead.

But the error was serious considering Sinovel floated its shares on the Shanghai Stock Exchange on 13 January 2011 with an issue price of CNY 90 per share, a record high in the stock exchange. It raised $13.97 billion in the IPO, 28.1% of the total IPO funds raised in the Chinese wind power sector in the previous five years.

Xu Feng, a lawyer at Shanghai Huarong law firm, said Sinovel allegedly made false statements, and this is a major issue for information disclosure of listed companies.

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