China Forestry Holdings confirms resignation of auditor KPMG on Jan. 5, cites letter identifying 'irregularities'
January 9, 2012
(China Forestry Holdings)
– China Forestry Holdings Co.'s chairman Li Kwok Cheong has filed a statement with securities regulators in Hong Kong confirming the resignation on Jan. 5 of the company's auditor KPMG.
KPMG had notified China Forestry's board in a Dec. 31 letter that it would not stand for re-appointment as the company's auditor when its term of office ended at the company’s forthcoming annual general meeting. In a second letter, dated Jan. 5, KPMG resigned as China Forestry's auditors, the statement said.
According to China Forestry's statement, KPMG said in the second letter that it had not received results from an expanded investigation it had asked China Forestry to carry out after an independent board committee identified irregularities. KPMG said it would be willing to attend China Forestry's AGM if necessary.
China Forestry won backing from the U.S.'s Carlyle Group in 2008, when it sold an 11% stake to the group for US$55 million, according to an analysis by The Wall Street Journal. In 2009, Partners Group of Switzerland paid $30 million for a 5.5% stake.
KPMG uncovered irregularities while preparing its audit on the company in 2010. These were reported to China Forestry's board, and led to a suspension in the trading of its shares in January last year.
The primary sources of this article are a statement issued by China Forestry Holdings, Hong Kong, on Jan. 5, 2012, and an analysis by The Wall Street Journal, New York, on Jan. 6, 2012.