HONG KONG (Reuters) – China Premier Zhu Rongji told Chinese accountants on Tuesday in no uncertain terms not to cook the books.
Speaking to the 16th World Congress of Accountants in Hong Kong, Zhu said he had just four words of advice for mainland accountants: “Make No False Accounts”, adding that accounting standards in the world's fastest growing economy were still not high enough.
“As you know I seldom write inscriptions because my handwriting is not handsome. But I wrote four big words — Make No False Accounts — for the three accounting schools (in China),” he said in opening remarks to the conference which drew thunderous applause from the audience.
Chinese leaders often leave inscriptions with organisations or enterprises as a form of endorsement or celebration.
Zhu also said accounting standards in the world's fastest growing economy were still not as high as China's leaders expected.
The gathering is taking place under the glare of an intense media spotlight as accountants try to find ways to repair the damage inflicted on their trade in the wake of U.S. corporate accounting scandals.
But China, like the rest of the world, has not been immune.
Accounting horror stories, financial scandals and corruption in the world's most populous country have cast a pall over stock markets on the mainland and in Hong Kong this year, spooking local and foreign investors who had been drawn to Chinese stocks by promises of heady profit growth.
Some senior Chinese officials have repeatedly warned that fraudulent accounting was a “malignant tumour” which threatened the country's nascent market economy.
In a bid to lighten the mood, organisers have billed the gathering, held once every five years, as the Olympics of Accounting. Nearly 5,000 accountants from about 100 countries are expected to attend.
China's assistant minister of the Finance Ministry Feng Shuping vowed on Monday to set up a sound accounting system in line with global standards in three years.
Feng said a shortage of financial analysts and lack of experienced institutional investors hindered the formulation and effective implementation of accounting standards.
NO QUICK FIXES
But fund managers, responsible for making decisions on behalf of millions of small investors, said improvements cannot be expected overnight.
“What Zhu said has no material impact on the quality of Chinese firms,” said Joseph Lau, fund manager at Tai Fook Asset Management.
“It's not the problem of accountants anyway, but the problem of the owners. There will be an improvement in the coming days but not because of what Zhu said but because of recent incidents involving Euro-Asia and Greencool, etc. It has discouraged a lot of people from investing in China stocks.”
Scandal-hit Chinese orchid exporter Euro-Asia Agricultural (Holdings) Co Ltd said on Friday two creditor banks are “taking necessary action” to recover loans which it is unable to repay.
Its flamboyant founder Yang Bin, once one of the richest men in China, had been under house arrest but his whereabouts are not publicly known.
Greencool Technology Holdings, which makes environmentally friendly refrigerants, has been battered by negative press reports and concerns about its financial dealings with another company controlled by its chairman.