The reporter is asking very very difficult questions, and the answers he got from ONP are not completely verifying. What's really interesting about this report is that the Chinese are focusing on this as a tax evasion issue and not so much from the perspective of a stock fraud.
So, for example, the reporter in that article goes to the local tax authority and finds discrepancies between what ONP reports to investors and to tax authorities.
ONP explains to the reporter that some of its income is coming from facilities it doesn't own. The details of that are not clear, but it seems strange.
The reporter says "But our reporter in Beijing, under the Bureau of Enterprise Trade and Industry Information Network, made a query and the name or names containing "Oriental Paper" field in the book business does not exist. There are no qualified companies with the legal representative registered to the name "Liu Zhenyong" opening businesses."
You have to love the free press, even in a communist country. There is no smoking gun in the article, but the reporter is repeatedly making the point that the facts don't add up in their current form. And you very much get the feeling that they are going to be bulldogs and now come at ONP from the Chinese side with additional questions and articles. Call that article Round One for the Chinese press.
I guess one outcome to all of this would be that they were honest to investors and dishonest to Chinese tax collectors. They clearly aren't enjoying the attention.
The more I think about it, the more it makes sense.
(1) A mom and pop would have a hard time getting on to the exchange since 75% of Chinese companies that try to via reverse mergers fail. This makes it unlikely it is a mom and pop.
(2) If they were cooking the books to multiple amounts of what their real profits were, and registered that with the government, the amount of taxes would destroy a mom and pop business. This being the case, it seems they have been underreporting to avoid taxes.
I am not sure what to get from this. But it is pretty certain that ONP was doing some tax evasion accounting, which seems to be the source of any financial discrepancies for the stock fraud. It is fairly common practice, but that doesn't excuse it.
Now all the question is whether they confirm that 1) It is tax evasion 2) Stock fraud 3) Both.
I am more on the side that they have the production capacity, and some of their net profit is high due to evading the tax man.
Glad to see that was someone else's take on those Chinese articles. They were avoiding the taxman in Bejing. Don't think it's an unusual way to do business over there from following paper trails on some Asian stocks. Don't know if the Chinese authorities will do much in a 'legal' sense as I think a good part of China, this is business as usual. I guess when that guy (sorry don't know his name, but enjoy him), from wsmco said it's like the old wild west, it is. Necessity is the mother of invention, certainly applies. I kind of summed it up in my own head after reading a number of reports, that when you see the pr's coming from Asian companies, it's not what is, but what they hope it will be in 10 years time. I guess if you went back in history to our own ancestors, you'd find many similarities.