23 Chinese companies booted from ASX after raising $233m from Australian investors
A Daily Telegraph investigation finds Australian shareholders have lost hundreds of millions of dollars to Chinese companies punted from the stock market. SEE THE LIST OF ASX FAILURES
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They came Down Under then went under, costing Australian shareholders more than $200 million.
An investigation has found the number of Chinese companies that have been punted from the Australian Securities Exchange (ASX) in the past 12 years is greater than what remains listed.
Many of the 23 failures involve alleged fraud, embezzlement or intervention by government authorities in China.
The Daily Telegraph can also reveal at least six of these unsuccessful attempts to fuse communism and capitalism have featured the same auditor and corporate advisor. Both deny any link between their involvement and the companies being delisted.
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Senior Australian politicians have been caught up in the disasters too after becoming directors of the doomed companies following their careers as MPs.
Via initial public offerings, or IPOs, the 23 companies collectively raised $233 million, which is now gone.
On top of this amount, Australian investors such as Ray Munro got dudded as the original Chinese owners sold down more of their shares after listing.
Mr Munro built up a substantial stake in soccer boot maker XPD not realising the sellers of the stock included executive chairman Jiameng Zhang, who had not disclosed his trading to the ASX as he was supposed to.
“I lost about $250,000,” Mr Munro said. “I think it’s not good that the ASX didn’t do more or that ASIC didn’t do something when all this obvious nonsense was going on.”
XPD was booted from the ASX last month after its Australian board members said they were unable to get financial information from its Chinese subsidiary, which is run by the Zhang family.
While only a few of the 23 have been liquidated, all have been delisted — including six this year — leaving shareholders unable to sell their stock, rendering it worthless.
Former NSW Deputy Premier Andrew Stoner was a director of two of the Chinese companies to be delisted, China Dairy Corporation and Bojun Agriculture.
Mr Stoner retired from politics at the March 2015 state election. He joined China Dairy’s board the following year.
Its problems included the filing of forged documents with authorities, as it disclosed to the ASX in June 2018.
There is no suggestion Mr Stoner was involved with the forgery.
“I resigned from that role in 2018 due to concerns about the financial practices of that company,” he told The Telegraph.
“I took my concerns about this company to the ASX, ASIC, the AFP, and to authorities in Hong Kong and China.”
Mr Stoner was food and beverage maker Bojun’s chairman when it listed in 2017. He quit within 13 months.
Shortly after he quit, the ASX asked Bojun to provide a list of people who had access to its bank accounts, amid concerns about the role of a mystery figure in China. There was no implication of wrongdoing by Mr Stoner.
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Former federal Tourism and Sport Minister Andrew Thomson, who held the eastern suburbs seat of Wentworth, chaired two of the now-delisted companies, Eagle Health Holdings and Winha Commerce and Trade.
Mr Thomson, who is now based in Japan, could not be reached by phone or email on Monday.
At least six of the Chinese companies that joined the Australian stock market had the same Adelaide auditor and Melbourne advisor.
In total, eight failed ASX-listed Chinese companies used Grant Thornton’s small South Australian team to sign off on their accounts prior to their demise.
A Grant Thornton spokeswoman said: “We are independent auditors and have a clear focus on delivering high quality audits to support public confidence in the reliability of financial information in our capital markets.
“It’s worth pointing out that the companies you’ve identified are all unrelated — different sectors and coming from different parts of China. The directors and management of the companies are responsible for their operations and financial reporting.”
Six of the companies audited by Grant Thornton Adelaide were brought to the bourse by Victorian corporate advisory firm IDC Capital, which was connected to at least two other Chinese companies that listed here then collapsed.
IDC’s involvement went well beyond assisting with the IPO; in some instances, one of the firm’s founders joined the board.
IDC’s founding partner and executive president Andrew Smith chairman of XPD, EHH and Zheng He Global Capital, which failed after an executive and one-time Malaysian government minister Dr Tan Tiong Hong took $US19 million ($26 million) without the board’s knowledge, then died.
Another of IDC’s founders, Ting Jiang, was a director of XPD and three other failures including Xiaoxiao Education. He was contacted for comment.
Xiaoxiao bought a Sydney childcare centre, then its chairwoman Madam Yongrong Tong added a non-producing Chinese iron ore mine to the company’s assets before being detained by authorities in China. It’s understood the business has been nationalised.
Mr Smith told The Telegraph it wasn’t “standard practice” for an IDC founder to join client company boards.
And he said it was “unfair” to suggest IDC’s involvement with some failed companies had been a factor in their “destiny”.
“You are looking for a connection,” Mr Smith said. “There’s no pattern there I can see.”
An ASX spokesman said only about 20 Chinese companies remain on the stock market.
He would not comment on whether the failure rate of more than 50 per cent was high.
“We present the numbers as they are,” the spokesman said. “Others may wish to provide further analysis or commentary.”
He did say that listing rules had been tightened.
“The number of companies being delisted — or not listed at all, whatever their market of origin — is indicative of the steps ASX is taking to ensure standards are kept high.”
An Australian Securities and Investments Commission spokesman said “we have worked with market operators to improve the quality and standing of market entrants, particularly at the smaller end of the market.
“That work continues,” he said. “And where there is clear evidence of wrongdoing then ASIC can always make further enquiries, and we do, but there does need to be sufficient reason for that.