GuShiio.com ① The financial information disclosed by Dongfang Group from 2020 to 2023 is seriously false, suspected of major financial fraud, and may involve major illegal and forced delisting situations;
② The auditor of Orient Group’s financial reports from 2020 to 2023 is Dahua Certified Public Accountants, and standard unqualified audit reports have been issued for the financial reports from 2020 to 2022.
Cailian News, March 1 (Reporter Gao Yanyun)Dongfang Group is mired in financial fraud or faces major violations of laws and forced delisting.
On February 28, the China Securities Regulatory Commission notified the progress of the phased investigation into Dongfang Group’s financial fraud case. On June 20 last year, the China Securities Regulatory Commission opened an investigation into Dongfang Group. It has been initially ascertained that the financial information disclosed by Dongfang Group from 2020 to 2023 is seriously false and is suspected of major financial fraud, which may involve major illegal forced delisting. The case is currently under investigation, and the CSRC will find out the illegal facts as soon as possible and deal with it seriously in accordance with the law.
The China Securities Regulatory Commission said that financial fraud by listed companies seriously harms the interests of investors. The China Securities Regulatory Commission will investigate and deal with all types of fraud strictly and quickly, and strengthen three-dimensional accountability for administrative, civil and criminal matters. For listed companies that are involved in major illegal and compulsory delisting situations, the delisting system will be strictly implemented, such “black sheep” will be resolutely eliminated, and counterfeiters will pay a heavy price.
Should intermediaries be held accountable and which intermediaries should be held accountable? This issue has attracted attention.
Four consecutive years of financial fraud
On February 28, Orient Group issued an announcement that due to serious false financial information from 2020 to 2023, the company was suspected of major financial fraud, which may involve major illegal forced delisting. The company’s shares will be forcibly delisted through major violations of the law, and there is a risk that they will not meet the conditions for reorganization. At the same time, the company is expected to be unable to repay the 629 million yuan raised funds temporarily to replenish working capital on schedule. At present, the investigation by the China Securities Regulatory Commission is still in progress, and the company has not received conclusive opinions or decisions on the above-mentioned investigation matters.
So far, the company has reminded more than 30 times in relevant announcements in the previous period that the company may have a major risk of forced delisting in violation of laws.
In terms of performance, Orient Group expects to achieve a net profit attributable to shareholders of listed companies in 2024 of a loss of 800 million yuan to a loss of 1.2 billion yuan.
Financial reports over the years show that during the period of financial fraud of the company from 2020 to 2023 mentioned by the China Securities Regulatory Commission, only 2020 achieved profit, and net profit losses for three consecutive years in 2021, 2022, and 2023.
The details are as follows:
In 2020, the company’s operating income was 14.711 billion yuan, a year-on-year increase of 11.63%, and the net profit was 240 million yuan, a year-on-year decrease of 58.8%;
In 2021, the company’s operating income will be 13.729 billion yuan, a year-on-year decrease of 6.68%, and the net profit loss will be 1.719 billion yuan, a year-on-year decrease of 814.81%;
In 2022, the company’s operating income will be 11.265 billion yuan, a year-on-year decrease of 17.94%, and the net profit loss will be 996 million yuan, a year-on-year increase of 42.08%;
In 2023, the company’s operating income will be 6.081 billion yuan, a year-on-year decrease of 46.02%, and the net profit loss will be 1.557 billion yuan, a year-on-year decrease of 56.38%.
Relevant intermediaries may affect
It is worth noting that there is a high probability that relevant intermediaries will be affected.
Orient Group’s related financial reports show that the auditor of the four-year financial reports from 2020 to 2023 is Dahua Certified Public Accountants. Among them, in the three-year financial reports from 2020 to 2022, Dahua Certified Public Accountants issued standard unqualified opinions. Audit report.
However, in the 2023 financial report, Dahua Certified Public Accountants issued an audit report with qualified opinions, mainly involving the following: First, as of the approval date of the 2023 annual report, the company’s controlling shareholder Dongfang Group Co., Ltd. in Harbin Longteng Branch of Longjiang Bank Co., Ltd. The 454 million yuan working capital loan of Longteng Branch is due and has not been repaid, and repayment arrangements or extensions are being negotiated with the bank; Second, there is great uncertainty about the future recoverable amount of real estate cooperative development projects.
According to relevant requirements, accounting firms issue audit opinions on the financial reports of listed companies, and therefore Dahua Club may bear joint and several liability for this. Judging from the audit reports for the above three years, they are all “unqualified opinions”.
On March 8 last year, Dongfang Group announced that SDIC Securities issued a verification opinion on Dongfang Group’s use of idle raised funds to temporarily replenish working capital. SDIC Securities, as the sponsor of Dongfang Group’s 2015 non-public offering of shares, SDIC Securities has no objection to listed companies using part of the idle raised funds of 629 million yuan to temporarily replenish working capital.
Orient Group’s 2015 non-public offering of shares was approved by the China Securities Regulatory Commission and agreed that listed companies would issue no more than 1.195 billion new shares in non-public offerings. The listed company issued an actual non-public offering of 1.191 billion ordinary shares, with a total amount of funds raised of 8.703 billion yuan. All the funds raised from this issuance were received on May 18, 2016, and were verified by Dahua Certified Public Accountants.
Orient Group’s 2023 and recent financial reports show that the sponsor institution performing continuous supervision duties during the reporting period was SDIC Securities, but the period of continuous supervision indicated was from May 26, 2016 to December 31, 2017.
The accounting firm hired by the company is Dahua Certified Public Accountants and the above-mentioned information on SDIC Securities is also reflected in the content of the 2020-2022 annual report.
Wu Qing: Strengthen market constraints such as the role of intermediaries as “gatekeepers”
Regarding the financial fraud of listed companies, the regulatory authorities have always maintained a strong and strict supervision attitude.
On February 1, Wu Qing, Chairman of the China Securities Regulatory Commission, wrote an article in the latest issue of Qiushi magazine, pointing out that efforts should be made to prevent counterfeiting and counterfeiting, implement the opinions on comprehensive punishment and prevention of financial fraud in the capital market, and further improve clues such as financial fraud. Discovery capabilities, further improve corporate governance, and strengthen market constraints such as internal control of listed companies and the role of intermediaries as “gatekeepers”.
There are 19 articles in the “Regulations”, which mention that the practice standards of intermediary agencies should be clarified. It is stipulated that intermediaries should abide by the principles of honesty, trustworthiness, diligence, independence and objectivity, and must not cooperate with the company in carrying out illegal activities such as financial fraud, fraudulent issuance, and illegal information disclosure. The documents they produce and issue must not contain false records, misleading statements or major omissions.
On January 1/3, the China Securities Regulatory Commission stated at the 2025 System Work Conference that in 2024, the coverage of on-site inspections and on-site supervision of newly applying companies for initial listing will be greatly increased to no less than 1/3. Promote the formation of a comprehensive punishment and prevention system for financial fraud, seriously investigate and deal with a number of major and important cases such as fraudulent issuance, financial fraud, illegal reduction of shares, and market manipulation, and handle 739 cases of various types, with the amount of fines and fines exceeding twice that of the previous year.
