Tuesday, 4 December 2012

Medical device company goes bust - directors missing with $400 million

China Medical Technologies HQ does not look like that of a multimillion dollar company
Liquidators of China Medical Technologies, a maker of medical testing equipment that was once listed on Nasdaq and is now bankrupt, are alleging that around $400 million in cash the firm raised in stock and bond sales has gone missing. The allegations are in a complaint that the liquidators filed late last month to the Hong Kong police and the FBI.
In the complaint, the liquidators say that the CEO’s wife gambled substantial sums at the Wynn and Bellagio casinos in Las Vegas. They are also looking into some properties in Hong Kong registered to the wife of the firm’s former finance director. And they add that both the CEO, Wu Xiaodong, and the ex finance director, Sam Takyung Tsang, have evaded the liquidators’ attempts to contact them.
China Medical was a large and well-regarded public company, with top-tier investors and advisors. The liquidators do not yet know much about what happened. They have spotted that funds from China Medical’s bond sales allegedly went into a Hong Kong bank, and back out again. China Medical said the money would be used for “general corporate proceeds” and acquisitions. But the liquidators say that “most of the fund raising proceeds do not appear to have been invested in the PRC [People's Republic of China] subsidiaries.” Citing Chinese government records, they report that China Medical’s subsidiaries in mainland China only ever reported around $60 million of registered capital.
In their complaint, the liquidators add that they visited China Medical’s Chinese offices. “The liquidators’ observations of the premises of the PRC subsidiaries during their site visits indicate that these premises are not the result of an investment nearing $400 million.”
Could some of the money be in Las Vegas? Without saying where they got the information from, the liquidators allege that Bi Xiaoqiong, the wife of China Medical CEO Wu Xiaodong, “has maintained accounts with at least two casinos in Las Vegas (Bellagio and Wynn) and has undertaken gambling activities which involved substantial amounts in these two casinos as late as July 2012.” Liquidators say they cannot find much out, because they cannot track down China Medical’s top executives.
Read more: Quartz

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