Risk Assessment Company: Fear that VIE companies will become the eye of the Sino-US storm

Translation

The continuation of the coronavirus pandemic, coupled with economic weakness and geopolitical tensions, risk consultancy Steve Vickers and Associates (hereinafter referred to as SVA) pointed out that this has significantly worsened the risks faced by companies operating in Asia, and in particular the VIE (Variable Equity Entity) structure company may become key in the Sino-US struggle. The consultancy estimates that US investors alone account for up to USD800 billion in the market value of VIE investments. As rifts in Sino-US relations appear, investors may have to consider whether China's official acquiescence in the VIE structure can continue as it has done in the past, and what possible consequences should be assessed when Sino-US relations deteriorate further.

More and more cases of high bulk cargo fraud in Asia

Affected by the coronavirus pandemic and economic adjustments, SVA pointed out that many companies have “treated” their accounts receivable, exaggerated asset values, or swindled funds. In Hong Kong, several individuals have been accused of using fake premises to develop letters of credit and even fabricating salary lists. SVA also sees more and more cases of share speculation fraud in the region that are vocal about high bulk cargo. Luckin Coffee, which is listed in the United States, uses complex structures or financial tools to conceal huge losses, which may become more and more common. The bank also noticed that some sponsors and investment banks handled the due diligence of IPOs in a rough way, and the participating teams only reported their own interests and fully reported all fees and charges. The bank recommended that investment banks must implement rigorous due diligence standards and supervise their work. Handed over to legal personnel or relatively neutral institutions. In addition, cyber-crimes are rising at an alarming level, and criminals with less technical knowledge are involved in more ransomware-as-a-service activities, increasing risks.

Original texts

風險評估公司：恐VIE公司成中美角力風眼

【明報專訊】新冠疫情持續，加上經濟疲弱及地緣政治緊張，風險評估機構Steve Vickers and Associates（下稱SVA）指出，這令在亞洲地區內營運的企業面對風險明顯惡化，尤其是原先行之有效VIE（可變權益實體）結構公司，在中美角力下或成風眼。該行估計，單是美國投資者佔VIE公司投資市值高達8000億美元。隨着中美關係出現裂痕，投資者或要考慮，中國官方過往默許VIE結構能否繼續下去，以及在中美關係進一步轉差時，評估有哪些可能後果。

亞洲區愈來愈多唱高散貨詐騙個案

受新冠疫情及經濟調整影響，SVA指已見很多企業將應收帳「發水」、誇大資產值，或詐騙資金。在港已見若干個人因為使用假的處所去開發信用狀，甚至揑造薪資名單而被告的個案。SVA亦見在區內有愈來愈多唱高散貨的股份炒賣詐騙個案。在美國上市的瑞幸咖啡採用複雜的架構或財務工具，隱瞞巨額虧損的情况，恐愈來愈普遍。該行更注意到，若干保薦人及投資銀行處理新股上市的盡職審查較粗疏，參與團隊只顧本身利益而盡報所有費用收費，該行建議投資銀行務必執行嚴謹的盡職審查標準，並將監督工作交由法律事務人員或相對中立的機構處理。另網絡罪案正處於令人警覺的程度般上升，並對技術掌握較少的犯罪者參與更多勒索軟件即服務勾當，增加風險。