China Metal Recycling Holdings Ltd ("CMR" or "the Company") was said to be the largest scrap metal recycling company in mainland China. It was listed on the Hong Kong Stock Exchange in June 2009. For a few years after its initial listing, the Company reported extremely high revenue and profit growth. Many investment houses assigned its stock "buy" or "strong buy" recommendations. This optimistic situation lasted until January 2013, when California-based Glaucus Research Group issued a report pointing out that, in comparison with other publically available industry data, CMR's reported sales figures were unlikely to be true. This rang the regulatory alarm bell. The Securities and Futures Commission of Hong Kong ("SFC") conducted an investigation and found reporting fraud. On July 29, 2013, the SFC obtained court orders appointing provisional liquidators to take over the Company. CMR was suspended from trading on main board of the Hong Kong Stock Exchange. Several of the Company's key directors and officers were arrested in the next couple of weeks. The information provided in the Company's annual reports complied with Hong Kong listing requirements and financial reporting standards. It apparently had sound corporate governance structures. For three and a half consecutive years, its external auditor, a leading international accounting firm, had given its financial statements "true and fair" marks. With all these seeming positives, investors were easily misled. How can investors uncover such camouflaged financial fraud? What are the key risk areas one should focus on when analyzing a company? How can a company's financials be double-checked using publically available information?

Founded in 1980, Peregrine Financial Group, Inc. ("PFG") was incorporated in 1992 as a futures commission merchant in the USA and officially registered with the National Futures Association, specializing in commodities and foreign exchange futures brokerage services. In 2008 PFG was rebranded as PFGBest, it purported to have customers in more than 80 countries and more than US$600 million in customer assets by 2012. On 10 July 2012 PFG filed for Chapter 7 protection after its founder and chairman, Russell Wasendorf, Sr. attempted suicide. In his suicide note, he described his fraudulent act of embezzled as much as US$220 million from PFG's bank accounts in the past 20 years. He admitted that his ego was too big to admit failure and so he cheated. A totally unrelated company Peregrine Investment Holdings Limited ("PIHL") was founded in 1988 by former Citibankers Philip Tose and Francis Leung who were backed by many of Hong Kong's business elites. It was "Asia's only indigenous investment bank" and took prominent roles in the local bourses. PIHL underwrote a US$265 million bond issue by Steady Safe, an Indonesian transportation company, which collapsed by the end of 1997. In January 1998 PIHL was forced into liquidation after it lost all liquidity and failed to get white knights or emergency relief from the Hong Kong Monetary Authority. A report commissioned by the Hong Kong Government cited poor risk management and flawed internal control as the causes for the downfall of PIHL. .

Lantian Stock was China's first state-owned agricultural enterprise to have gone through the corporatization reform in mid 90's. Since its listing in 1996, Lantian Stock had recorded a dazzling performance in its financial statements. However, in October 2001, its resplendent image was smashed by an academic researcher, Liu Shuwei with her powerful 600-word article that pointed out the liquidity crisis of Lantian Stock. Consequently, all banks in China refused to extend loans to the company. Meanwhile, Liu faced defamation prosecution brought up by the company who initially denied the allegation. The defamation charge was dropped eventually as the Chinese regulators began to unveil the hidden truth that Lantian Stock had indeed involved in misreporting and perpetrating accounting fraud. Chinese media also dug up the controversial background, mythical tales and the previous fraud record of Lantian Stock. Since Liu could uncover the misstatement based on some basic financial ratio analysis, she remained skeptical about why such wrongdoings had not been discovered by related parties earlier. Alternately, the auditing or CPA firm of Lantian Stock commented that the fraud was undetectable as it had gone far beyond what CPAs could discover from its required procedure, and blamed it on the Chinese environment that was conducive to accounting fraud. Was the circumstance of Lantian Stock scandal as what the CPA had claimed?

Haier Group was China's largest white goods manufacturer and one of the world's fastest growing white goods companies. The company started out as a nearly bankrupt refrigerator plant in Qingdao, China, equipped with a group of low-skilled and undisciplined workers, low productivity, inferior product quality and a loss making business. Its current CEO, Zhang Ruimin, first took over the company in 1984 and established corporate rules and culture, revamped business strategy and set up an incentive-based management control system. All of these transformed Haier into a global player in less than 2 decades. This case study examines the establishment of Haier's management control system and how it was adapted into the company's internationalization strategies, how it motivated employees to reach high performance goals and how it structured the business units to obtain optimal operational efficiency.

Yinguangxia ("YGX"), a joint stock listed company in China, has captured much media attention since the mid-1990s for its contribution to China's eco-agricultural industrialisation and modernisation of traditional Chinese medicine. The astonishing leap of its share prices, about 440% in 2000, caused journalists at Caijing, a local reputable financial magazine, to be suspicious and they set off to investigate YGX. On 2 August 2001, Caijin published an article alleging YGX's misrepresentation of export activities, which involved its Tianjin subsidiary's sale of biologically extracted products to a German company, Fidelity Trading GMBH. A profit overstatement of US$93 million from 1998 to 2001 was eventually revealed by China Securities Regulatory Commission, and four of the company's senior officials, including the former CEO and CFO of YGX and Tianjin Guangxia, were sent to jail for forging documents and fraudulent misrepresentation of information. The operating licence of the company's external auditors, Zhongtianqin, was revoked and the professional certificates of its two certified public accountants were repealed. The scandal also resulted in the investors' crusading pursuit of private indemnification against their investment loss; the legal protection of private shareholders in China remained an issue of great concern in the country. Having been a top performer on the Chinese stock market, YGX's fallout has revealed the deficiencies of the corporate governance system in China. It also brings to light the problems involved in auditing practices in China.

The collapse of Procomp Informatics Ltd, a major Taiwanese chipmaker, has been regarded by Taiwan's market watchdogs as similar to the scandal of the U.S. energy giant Enron in 2001. In June 2004, Procomp defaulted on a bond payment and structured for bankruptcy, despite a huge cash balance recorded in its books. It was discovered that the company's executives and its overseas sales agents had colluded in overstating sales revenue, manipulating stock prices, illegally leveraging assets, and arranging bonds through paper companies. The incident left thousands of company shareholders with massive financial losses. Raises concerns about corporate governance and risk management of public companies in Taiwan, and calls into question the credibility of the financial reporting process, companies' internal controls, and corporate ethics in the Asian context.

In April 2004, Singapore's Straits Times alleged in an article that T.T. Durai, CEO of the National Kidney Foundation (NKF), had been drawing on public donations to pay for his generous salary, perks, and expenses. The media also discovered that Durai had installed extravagant fittings, including a gold-plated tap, in his office bathroom. Singaporeans, especially donors, were outraged at how the NKF had mismanaged donor funds. Finally, after intense public pressure, Durai and the NKF Board resigned in July 2005. Illustrates the importance of governance, transparency, and public accountability among social enterprises, and the consequences of weak internal controls over financial reporting.

KingJewels, one of the leading jewelry manufacturing and trading companies in Hong Kong, was having another profitable year. With its operations director essentially running the company in Hong Kong while the owner and CEO focused his energies on expanding the business into international markets, an opportunity had arisen for foul play. Accounting records had been manipulated and some senior staff were found to have forged shipping documents and accepted bribes from suppliers in exchange for awarding contracts. To complicate matters further, the professional and personal relationships between some key players in the company were blurred, making it even more difficult for the eventual whistle blower to decide her course of action. Illustrates the importance of corporate governance and internal control, even for SMEs, and especially when senior management members of the company concerned had ties that extended beyond professional relationships.

AccuForm, a German-Hong Kong joint venture specializing in the production of chemical coatings for application to garments, is confronted with a situation where an unauthorized Chinese manufacturer had stolen one of AccuForm's experimental coatings, applied it to their own brand of clothing, and sold it to the public as an AccuForm product. The product had caused allergic reactions in some children, and the media had widely reported the incident. It was later discovered there was more to the situation than stolen coating, as some staff were found to have engaged in money laundering, misappropriation of company assets, acceptance of illegitimate rebates, and bribes. The general manager of AccuForm, in addition to having to deal with the media, also had to find a way to resolve the differences in business practices between the company's German and Hong Kong parents, which are thought to have been partially responsible for the incident, as well as rebuild staff morale and customers' confidence in AccuForm's products. Illustrates how differences in company cultures can create difficulty for management, and what are formulas for success in one country may be guarantees of failure in another.

Hong Kong logistics companies are facing increased competition from the Chinese mainland operators, particularly in cross-border logistics business in the Pearl River Delta region. Examines the cost structure of Transland's (a Hong Kong-based third-party logistics operator) cross-border trucking operation, the inefficiencies captured in the logistics pipeline, and the cargo and sea trade challenges facing Hong Kong.