China Metal Recycling plunges as CFO resigns

The shares fell 24 percent, the most since the stock debut in June, to close at HK$8.57. It earlier fell as much as 45 percent.

“Mr. Wong stated in his notice that the reasons for his resignation were that the Board had failed to address his concerns or provide clarification on certain issues and that he had been denied proper access to the financial information of the company,” China Metal said in its statement to the Hong Kong exchange. The company denied Wong's contentions.

The Guangzhou-based company had raised HK$1.55 billion ($200 million) in June in what was then Hong Kong's second- biggest initial public offering for the year. The dispute today follows on the heels of accusations against Hong Kong-listed China Zhongwang Holdings Ltd. about the accuracy of its customer list in its prospectuses this year.

“The market is very sensitive to these kind of corporate governance issues nowadays so the stock just smashed to the floor,” said Castor Pang, a Hong Kong-based research director at Cinda International Holdings Ltd.

Wong, 56, joined China Metal Recycling in May 2008 and was also the deputy chief executive officer, according to the company's listing document. He was formerly group head of financial control and business development at Sun Hung Kai Properties Ltd. from 2002 to 2008, the document said.

Audit Issues

The company will reserve its rights against Wong, China Metal said in an e-mailed statement via its public relations company Strategic Financial Relations Ltd. Wong couldn't be reached for a comment.

In a second statement later today, the company said it will engage auditors Deloitte Touche Tohmatsu to review its nine- month earnings, and that Chairman Chun Chi Wai bought 1.09 million shares in the company today to show his confidence and support.

Wong had raised “certain issues” on Nov. 3 with the Audit Committee and senior management were preparing a report for the board when Wong tendered his resignation on Nov. 11, the company said. It didn't elaborate on the issues.

The former executive was unable to access the company's financial databases because a security upgrade on its servers disabled computer access, China Metal said.

China Metal appointed Lam Po Kei as its chief financial officer from Nov. 16, according to its statement. The company couldn't immediately comment.

Profit rose 35 percent to HK$189 million in the six months ended June 30 because of strong demand for copper in China, the company said in September. The company had net current assets of HK$2.46 billion as of June 30, of which cash and bank deposits were HK$937.2 million, it said.

Total borrowings, including discounted bills, were HK$347.9 million, and the gearing ratio was 8.3 percent.

In September, the Economic Observer claimed China Zhongwang, an aluminum product maker, had falsified customer information. The claims weren't correct and the paper had apologized, Zhongwang said Sept. 17. The company in October hired Ernst & Young to independently review its initial public offer prospectus, it said Nov. 3.

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