The Chinese owners of AgFeed Industries Inc. cooked the books of three large hog farms in the United States, judging by court documents filed in connection with a bankruptcy.
AgFeed USA filed for bankruptcy protection from creditors in July, then sold its farms in August to High Plains Pork LLC, Cohoma Pork LLC and Murphy-Brown LLC for $79.2 million.
AgFeed is facing a U.S. Securities and Exchange Commission investigation into securities law violations and a securities class action lawsuit.
In a disclosure statement filed last month in U.S. Bankruptcy Court in Delaware, AgFeed USA said a special committee of its board found evidence that AgFeed Industries artificially inflated various accounts in order to increase profits in its hog farm operations in 2008 through the first half of 2011.
“Chinese management falsified documents to support these transactions and maintained two separate sets of books — one real set of books and one that would be sent to management and the board in the U.S.,” according to the statement filed in bankruptcy court.
It said 29 of the company’s hog farms reported “fictitious purchase and sale transactions” in 2008-2011.
Managers in China openly discussed their methods for doctoring financial results, Bloomberg News reported, citing AgFeed employee emails it obtained.
“Sometimes I really want to work well on the real stuff, but the need to balance the falsified data often takes up my time,” AgFeed Industries finance manager Wu Jiangqi wrote to supervisors in an email obtained by Bloomberg.