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.
