Eratat seeks details on investigations into unit

Eratat Lifestyle said on Friday that it has requested for more details on the investigations led by the China Banking Regulatory Commission (CBRC), which last month found a forged bank confirmation linked to the company’s subsidiary.

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Eratat seeks details on investigations into unit

Jamie Lee
12 September 2014

Eratat Lifestyle said on Friday that it has requested for more details on the investigations led by the China Banking Regulatory Commission (CBRC), which last month found a forged bank confirmation linked to the company’s subsidiary.

In August, the company said that CBRC in Fujian had highlighted that Eratat’s main subsidiary, HMW, had forged an earlier bank confirmation, and handed this document to the auditor of the group.

This followed an earlier announcement of a cash discrepancy at HMW. It showed the unit’s cash balance was 73,321.63 yuan (S$14,852) as at last Dec 31, instead of 577 million yuan as indicated in an earlier document issued by ABC Bank, the subsidiary’s bank in China.

The discrepancy was highlighted by an investigation by the Chinese bank, which also noted that the unit had bank borrowings of 34 million yuan as well as trade bills of 30 million yuan as at Dec 31, 2013.

Eratat’s board responded then that this was “contrary to the understanding of the board, as the management has not reported any bank borrowings previously and there were also no such indications in prior bank confirmations obtained by the company’s auditors”.

On Friday, Eratat said that it has requested a revocation of the reply from CBRC; an investigation of the significant discrepancies; details of the investigation procedure undertaken by CBRC, and the evidence obtained by them; as well as supporting documents relating to HMW’s account held with ABC for the years 2011, 2012 and 2013.

Earlier this year, the China-based company failed to make interest payments on its bonds, and could not even raise enough funds to pay for a special audit. Its last interim chief executive, Ho Ker Chern - who was put in place to verify the group’s cash balances and oversee investigations - resigned in end-May after not being paid for months.

Trading of Eratat’s shares has been halted since January.

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