September 13, 2014
The top management of Tianhe Chemicals reacted strongly to a report released by the analytics wing of infamous hacking collective Anonymous, in which it has accused the Hong Kong based company of committing fraud and cooking its books to show inflated sales.
Terming the Anonymous’ report “falsified information and blatantly untrue statements,” Xuan Wei, Chief Executive of Tianhe Chemicals, said: “We unequivocally deny and vigorously refute the groundless allegations in the report. The authors of the report have concealed themselves behind a shroud of anonymity with no information on their identity or background or their purported expert sources.”
The company, in a statement, has said that its email system was hacked, which has in a way compromised its communications with the Hong Kong stock exchange over the claims made in the report. Responding immediately to the crisis, the company’s management had issued the lengthy rebuttal, which was published on the website of HK stock exchange.
After the release of Anonymous’ report on September 2, trading of the shares of Tianhe chemicals, the company which was listed only since June when it raised about USD 650 million, has been suspended, media reports noted.
It was found that the attack on Tianhe comes amid an increase in activity among short-sellers betting on a drop in the shares of Chinese companies. Some more incidents of similar nature were also reported this week.
Carson C. Block of Muddy Waters Research made public a new short position on 500.com, which is a Chinese sports gambling website listed on Nasdaq. Earlier on Wednesday, another short-selling research company with the name – the Trinity Research Group – published a report targeting the 21 Vianet Group, a Chinese Internet data centre services company, which is also listed on Nasdaq.
However, the Anonymous’ report on Tianhe is notable due to the size of the Chinese company which holds a market value of about USD 7.6 billion and its backers, which include Morgan Stanley’s Asian private equity unit. The Morgan Stanley invested USD 300 million in Tianhe in 2012.