by Anton Shilov
12/21/2004 | 02:30 PM
After Taiwan Stock Exchange demanded to downgrade ABIT’s stock due to allegedly unclear accounting policy of the mainboard maker, company’s chairman, Remond Lu, reportedly said that ABIT’s correspondent banks may freeze its assets, which would force the company to suspend operations. Still, some other officials from the company claim there are no problems likely to come.
ABIT Faces Accounting Scandal
Over 70% of ABIT’s total import and export business in the first half of this year were conducted through seven Hong Kong-based companies, all of which were located at the same address, with a registered capital of just HK$2 ($0.26) each, according to a statement from the Taiwan Stock Exchange cited by DigiTimes web-site. The TSE also accused the mainboard maker in the lack of shipping documents on products worth roughly $126.74 million in the January-June period.
The Taiwan Stock Exchange also suspects that management at ABIT might have embezzled company funds through the issuance of a euro convertible bond (ECB). According to the TSE, ABIT invested $40 million in an offshore company with a book value of only $3.3 million. The owner of that offshore company then bought a portion of the $75 million ECB issued by ABIT last year.
As a consequence of accusations, ABIT may face investigation and even have at least some of its assets frozen, which will effectively force the company to cease certain, or all, of its operations, as it will not have funds to pay for components of its products.
ABIT Says It’s Financial Operations Were Clear
While the company does not explain peculiarities of its operations and respond to allegations, it says its financial and accounting policies are transparent..
“ABIT has experienced rapid growth in 2004, with Sales Revenues increasing 77% to a total of US$ 558 million for the first 11 months of the year. In addition to hitting a historical high in revenues in 2004, ABIT has moved from a Top 10 Motherboard maker in
ABIT, which is headquartered in
“ABIT refuted the accusations recently made against the company. ABIT stands by its financial reports and will continue to offer all assistance to the Taiwan Stock Exchange (TSE) in order that they are able to better understand the financial transactions of ABIT in 2004. All of ABIT financial statements are in accordance with Generally Accepted Accounting Principles (GAAP). ABIT now awaits the TSE to be better prepared in providing specific charges that ABIT would be able to directly address rather than the current list of generalities,” the company’s spokesperson added.
The company assured that an internal goal of ABIT in 2004 was to become one of the most financially transparent companies in
No Risk of Operations Suspensions
Certain sources claim that as a consequence of frozen assets the company may not be able to continue to produce mainboards. Some sales partners of ABIT have reportedly begun to seek for new partners on the news. However, other sources close to the company say there are no risks for the company to cease the manufacturing.
According to sources close to the company, ABIT is producing mainboards and graphics cards in full capacity at its
In order to further reassure the current and potential partners and customers, an ABIT’s spokesperson in the