ABIT Faces Accounting Scandal, but Says No Partners Affected
After Taiwan Stock Exchange demanded to downgrade ABITís stock due to allegedly unclear accounting policy of the mainboard maker, companyís chairman, Remond Lu, reportedly said that ABITís 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 ABITís 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 $75 million ECB issued by ABIT last year.
As a consequence of accusations, ABIT may face investigation and even have at least some of its assets frozen, which will effectively force the company to cease certain, or all, of its operations, as it will not have funds to pay for components of its products.
ABIT Says Itís Financial Operations Were Clear
While the company does not explain peculiarities of its operations and respond to allegations, it says its financial and accounting policies are transparent..
ďABIT has experienced rapid growth in 2004, with Sales Revenues increasing 77% to a total of US$ 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 China to the Top 5. ABIT has had an extremely successful year and are preparing to make even further gains in 2005,Ē said the company.
ABIT, which is headquartered in Neihu, Taiwan, also said TSE did not present a single concrete accusation, but a list of generalities.
ďABIT 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,Ē the companyís spokesperson added.
The company assured that an internal goal of ABIT in 2004 was to become one of the most financially transparent companies in Taiwan and expressed beliefs the misunderstandings of the TSE would be quickly resolved.
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 China factory Rolly Technology. Furthermore, ABIT has enough product stock as well as cash to support its operation. The mainboard firm reportedly continues to buy chipsets from its partners, including Intel, NVIDIA and VIA.
In order to further reassure the current and potential partners and customers, an ABITís spokesperson in the USA told X-bit labs: ďABIT USA normally keeps 1 month worth of stock. For holiday season we usually keep higher inventory level which is up to 2-3 months.Ē
1) The question is not on it's inventory level.
2) How much production originated from Taiwan and how much from China?? Frozen assets in Taiwan does not mean anything if production from China is the main thrust.
3) It is the matter of impropriety that partners such as Nvdia, AMD, Intel, Via etc are interested in knowing - 99% of PC users don't give a damn or don't know enough to give a damn.
There is always some truth to rumors ..... Abit should take the lead in clarifying this mess.
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