Corporate restructuring is bound to generate frictions. Even so, long-suffering shareholders in Hong Kong red chip Guangnan hardly expected to witness a public row between two of the world's leading accountancy firms KPMG and Deloitte Touche Tohmatsu.
Last month Deloitte withdrew its 1997 audited annual report. This is a highly unusual move that raises issues such as whether it's possible to withdraw a report that has been in the public domain for over a year to whether Guangnan should now be delisted for its lack of a continuous history of internationally audited reports.
The Guangnan saga is the latest in a number of unhappy experiences for investors in red chips - Chinese companies listed on the Hong Kong exchange. Transparency is a major problem with many mainland companies still regarding equity as an easy source of funds with few if any obligations. Yet international firms such as...
