Ocean Grand units may delay annual report filings, subsidiary controller missing

By Caroline Salls

Pittsburgh, Aug. 18 - Ocean Grand Holdings Ltd. subsidiaries OG Foshan and OG Chemicals may be forced to delay filings of their annual reports in light of ongoing accounting issue investigations, according to company news releases.

In addition, the company confirmed that there are no negotiations or agreements related to intended acquisitions or realizations.

Ocean Grand said it has been unable to contact or locate the financial controller of OG Foshan since July 8 to clarify some potential irregularities in the subsidiary's accounting records, which were identified in an audit.

As a result, the company has reported the matter to the Nanhai Public Security Department for investigation, and some OG Foshan books and records are now under the control of the Nanhai Public Security Department in connection with the investigation.

According to an Ocean Grand release, the irregularity is related to a supplier, which had conducted RMB 6 million in business with OG Foshan during the 15-month period ended March 31.

The company said the supplier currently has no outstanding balance with OG Foshan.

Ocean Grand is continuing to conduct an internal investigation, and its directors do not expect that the impact on the company's results would exceed about RMB 6 million.

During the audit, which is still continuing, the auditors have highlighted some issues to the audit committee and to the deputy and vice chairman and the Hong Kong management team, in particular concerning the recoverability and genuineness of some accounts receivable and accounts payable and sales and purchases of company subsidiaries.

As a result, the audit committee has engaged DTFS, an independent firm, to inquire into the business dealings between the relevant subsidiaries and their relevant customers and suppliers, as well as the results of the confirmation process undertaken by the auditors with these customers and suppliers.

In addition, steps are being taken to access the books and records of OG Foshan, which are currently under the control of the Nanhai Public Security Department, in order to facilitate DTFS' inquiry.

Also, the audit committee of subsidiary OG Chemicals intends to appoint DTFS to inquire into accounting issues related to its precious metal electroplating chemicals trading business and Kenlap Zhuhai.

As a result, OG Chemicals' annual report might also be delayed.

Ocean Grand is a Hong Kong-based chemical company.

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