Audit Determines 20-million Profit Inflation By Cosco Group

By Finance

China’s National Audit Office has determined that the global shipping leader that is Cosco Group has falsified profits, as evident by a 2014 work report that was released this past weekend.

The appointed authorities found out that the company has falsified documents regarding revenue in the amount of RMB 298 million (USD 48 million) and RMB 169 million (USD 27.2 million) in costs. The accusations towards Cosco Group are that it has overreported its net profit levels by RMB 129 million (USD 20.7 million) for the time period of five years – 2008-2013.

According to the report there are also some severe operational violations made by two subsidiaries of the group – Cosco Dalian Shipyard and Cosco Logistics. The audit determined that Cosco Group did not keep in regard the proper risk management and supervision factors when conducting its ship chartering operations. When accounting for the 2009-2013 time period, approximately RMB 34.1 billion (USD 5.49 billion) were reported in losses for long-term charters deals.

The latest government probe in question determined 14 government-owned companies to display at least some degree of financial irregularities. They have managed to rack up falsified profit in the amount of roughly RMB 19 billion (USD 3 billion), when regarding just the period taken into the audit account.

The audit report comes along the lines of a major anti-corruption campaign that was initiated by President Xi Jinping. The initiative mainly focuses on isolating improper fund allocation and management practices amongst state funded ventures. Over the course of the last two years, roughly 100,000 officials have been determined to be involved in some sort of corruption.

Cosco Group has been asked by China’s National Audit Office to release its own report which is to detail corrections applied to both revenue and cost levels for the audit period, which is then to be released to the public.