China Agritech has fired its auditor after the auditor threatened to resign. NASDAQ has suspended the stock and there is no indication of when it will trade again.
The Carlyle representative on the board (Anne Wang) has resigned and never answered any email I sent her or any questions on this blog.
The auditor firing 8K is a gem. Ernst & Young has recommended the "initiation of an independent investigation, in order to verify certain transactions and balances recorded on the Company’s financial statements and records for the year ended December 31, 2010."
E&Y also "orally advised the Audit Committee that it may not be able to rely on management’s representations based on the issues identified."
In other words they thought management may be lying and they thought an "independent investigation" (meaning independent of the board) was warranted.
None of this should be a surprise to any reader of this blog.
I also annoyed China Agritech's management especially because of my repeated (and unsuccessful) attempts to talk to Carlyle.
This is a letter I got from their PR flack on 24 February. How should I respond? Note that the flack (Kevin Theiss) says we (meaning Grayling - not China Agritech) have collected evidence that my allegations were groundless.
Dear Mr. Hempton,
We are aware that you have published a series of blog articles to negatively comment on China Agritech's business operations and attack the Company's credibility. It is becoming more alarming that you have repeatedly reached out to our largest outside shareholder. Your intention and ongoing efforts to derail our well-established, long-term relationship with our largest shareholder has come to our full attention. If you have any questions, concerns or comments, we welcome you to contact China Agritech’s management directly. We will provide you with our timely answers. Lastly, we have collected evidence that your allegations are groundless. If you continue to harass our shareholder, we will take further legal action against you.
-----------------------------Kevin TheissAccount DirectorGrayling USA825 Third Avenue, 18th FloorNew York, New York 10022
Tel +1 (646) 284-9400Direct +1 (646) 284-9409Fax +1 (646) 284-9494
E-mail firstname.lastname@example.orgE-mail email@example.comFollow Grayling NY:On Facebook at Grayling NYOn Twitter at www.twitter.com/GraylingNYGrayling is a global Investor Relations, Public Relations, Public Affairs and Events consultancy. We have offices in 70 locations, in 40 countries across Europe, the US, the Middle East and Asia Pacific. We are the second largest independent PR firm in the world. Grayling is part of Huntsworth plc.
PS. Huntsworth PLC - the company that ultimately threatened to sue me on behalf of China Agritech - is publicly listed. Their CEO states on their website that Huntsworth "have developed a culture of rigorous focus on margin improvement throughout the Group". Is there any business not worth doing for a high margin? Does this letter represent the quality of their work?