Arab Today, arab today us chinese execs stole coal firm assets
Last Updated : GMT 21:06:07
Arab Today, arab today
Arab Today, arab today

US :Chinese execs stole coal firm assets

Arab Today, arab today

Arab Today, arab today US :Chinese execs stole coal firm assets

Washington - AFP

US securities regulators on Wednesday charged two Chinese executives of US-listed Puda Coal with looting the company\'s main asset and selling it to the huge Chinese investment group Citic. In the latest scandal to hit Chinese companies listed on US stock markets, the Securities and Exchange Commission charged that Zhao Ming, Puda\'s chairman, and former chief executive Zhu Liping, had already stripped the firm of its main asset before Puda raised $116 million in two public offerings in 2010. While investors soaked up the offerings based on the potential of Puda\'s ostensibly 90 percent-owned, profit-generating mining subsidiary Shanxi Coal, Zhao had already secretly transferred Shanxi\'s shares to himself a year earlier, the SEC said in a court filing. He had then handed 49 percent of Shanxi Coal over to Citic Group unit Citic Trust in exchange for 1.2 billion preferred shares in a new coal investment fund created by Citic. Zhao also pledged 51 percent of Shanxi\'s assets to Citic for a $370 million loan. \"At the same time that Citic Trust was effectively selling interests in Shanxi Coal to Chinese investors, the defendants were still telling US investors that Puda owned a 90 percent stake in that company,\" the SEC charges said. \"The defendants\' fraud drove Puda\'s stock price down to pennies per share from a prior high of nearly $17, wiping out hundreds of millions of dollars in shareholder value. As a result of the defendants\' scheme, Puda is now little more than a shell company, with no ongoing business operations.\" Puda was one of a number of Chinese companies that became traded on US markets over the past decade via backdoor listings -- the company takes over another usually moribund firm already traded on the market. But many have produced more market scandal than profits. In the past year the SEC said it has revoked the securities registration of a dozen China-based firms and has begun reviewing whether to suspend or revoke the registrations of 27 more. Puda shares began trading on the Amex exchange in 2005 via such a move. When its key income-generating unit Shanxi Coal was chosen in 2009 to help the government consolidate smaller coal mines in Shanxi province, Puda went to investors for more cash ostensibly to fund the growth. But the SEC said Zhao with the help of Zhu had already quietly stripped Shanxi Coal from Puda and handed half of it to Citic. The SEC filed multiple charges of securities fraud against both Zhao, 39, and Zhu, 55. Both were said to reside in China.  

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