MMG case: CMA bars Deloitte from audit work for 2 years

CMA
Updated 19 June 2016

MMG case: CMA bars Deloitte from audit work for 2 years

RIYADH: Saudi Arabia’s Capital Market Authority (CMA) said it had barred the local unit of New York-based accountancy firm Deloitte & Touche from providing accounting services in the Kingdom for two years for breaching rules on accumulated losses.
The move by CMA’s Committee for the Resolution of Securities Disputes stepped up penalties already imposed on Deloitte over a long-running case involving its work for Saudi contractor Mohammed Al-Mojil Group (MMG).
The CMA previously suspended Deloitte from doing auditing work for listed firms in the Kingdom for two years while the case was pending, beginning June 1, 2015.
The judicial committee did not yet specify the date when the new and more extensive suspension would begin.
Deloitte did not respond to requests for comment.
The committee had on Thursday also sentenced three MMG executives to prison terms, including founder Mohammad Al-Mojil and his son Adel Al-Mojil, the firm’s chairman, for misrepresenting the company’s value.
Both men are to serve five years in prison, it said. A third executive received a three-year sentence, but was not named.
The committee had further ordered MMG to pay SR1.6 billion ($427 million) for “illegal profits” and imposed a separate fine of SR2.7 million, according to the statement.
MMG has not traded on the Saudi bourse since July 2012, when the CMA suspended it shares over the losses after it over-extended itself trying to take advantage of a construction boom in the Kingdom.
In an e-mailed statement on Friday, the Mojil family denied wrongdoing and said they would appeal the committee’s decision, calling the investigative process “defective from the start.”
They allege the men were not given an opportunity to respond to certain of the evidence used against them and question the CMA’s methodology for determining the company’s real share value.


Trump advisers urge delisting of US-listed Chinese companies that fail to meet audit standards

Updated 53 min 22 sec ago

Trump advisers urge delisting of US-listed Chinese companies that fail to meet audit standards

  • Growing pressure to crack down on Chinese companies that avail themselves of US capital markets but do not comply with rules
WASHINGTON: Trump administration officials have urged the president to delist Chinese companies that trade on US exchanges and fail to meet US auditing requirements by January 2022, Securities and Exchange Commission and Treasury officials said on Thursday.
The remarks came after President Donald Trump tasked a group of key advisers, including Treasury Secretary Steve Mnuchin and SEC Chairman Jay Clayton, with drafting a report with recommendations to protect US investors from Chinese companies whose audit documents have long been kept from US regulators.
It also comes amid growing pressure from Congress to crack down on Chinese companies that avail themselves of US capital markets but do not comply with US rules faced by American rivals.
“We are simply leveling the playing field, holding Chinese firms listed in the US to the same standards as everyone else,” a Treasury official told reporters in a briefing call about the report.
The US Senate unanimously passed legislation in May that could prevent some Chinese companies from listing their shares on US exchanges unless they follow standards for US audits and regulations.
Democratic Senator Chris Van Hollen, who sponsored the bill described the recommendations as “an important first step,” but said that “without the added teeth of our bill, this report alone does not implement the requirements necessary to protect everyday American investors.”
The administration’s recommendations, if implemented via an SEC rulemaking process, would give Chinese companies already listed in the United States until Jan. 1, 2022, to ensure the US auditing watchdog, known as the PCAOB, has access to their audit documents.
They can also provide a “co-audit,” for example, performed by a US parent company of the China-based affiliate tasked with auditing the Chinese firm. However, companies seeking to list in the United States for the first time will need to comply immediately, the officials said.
A State Department official told Reuters the administration plans soon to scrap a 2013 agreement between US and Chinese auditing authorities to set up a process for the PCAOB to seek documents in enforcement cases against Chinese auditors.
China said on Friday that the two countries have “good cooperation” in monitoring publicly listed firms.
“The current situation is that some US monitoring authorities are failing to comply with their obligations, and what they are doing is political manipulation — they are trying to force Chinese companies to delist from US markets,” foreign ministry spokesman Wang Wenbin told a media briefing.
The PCAOB has long complained of China’s failure to grant requests, giving it scant insight on audits of Chinese firms that trade on US exchanges.
The report also recommends requiring greater disclosure by issuers and registered funds of the risk of investing in China, as well as mandating more due diligence by funds that track indexes and issuing guidance to investment advisers about fiduciary obligations surrounding investments in China.
The moves come amid rising tensions between Washington and Beijing over China’s handling of the coronavirus and its moves to curb freedoms in Hong Kong, among other issues.