New York/Hong Kong (Reuters) - the shady business practices story can be found everywhere, in China - false income, false invoices, false factory - but until recently, this problem seems to be mainly limited to Chinese companies.
No longer.
Concern is growing about u.s.-based multinational companies in a country, the United States audit regulators have been locked by the Chinese government and the risk of fraud and bribery is the norm.
About the transparency and integrity problem is heavy in China, is the world's second largest economy, because it bear greater economic leadership, carries out the responsibility. These fears test its ability to meet international standards.
Commercial fraud story - enterprise detective, before the competent business, the court documents show, China's accounting experts confirmed - is the norm.
The bills itself as a high-tech TV screen manufacturers of Chinese companies, but there is a factory, it is a person sales fireworks from the shack.
Or is China's biological diesel factory, sit idle for months, and then live a day - when investors to tourism - only once again into silence.
Last month, there was a scandal, caterpillar (CAT), is the world's largest manufacturers of construction equipment, headquartered in Peoria, Illinois, in a Chinese unit.
1 month and day, caterpillar disclosure "intentionally, more than a year, coordinate accounting misconduct" four dimensional s coal mine mechanical and electrical equipment units. Caterpillar said it will pay $654 million cancellation ERA months ago that it.
Caterpillar's four dimensional halting the United States multinational companies in China is not the first time, but the scope of the problem, stand out.
Caterpillar provides some details, but already disclosure inventory differences, virtual increase profits and record the right cost and profit in the four dimensional.
Caterpillar declined further comment.
Caterpillar's part of the problem may not be sufficient due diligence work, before the acquisition of ERA. Accounting professor, Beijing university in Beijing, Paul geely, said the company often cost try to keep this, but in China may be asking for trouble.
Buy-out firms usually do some own due diligence, also depends on trading adviser, legal experts and auditor. Due to the risk of in China, efforts should be made to strengthen expose fraud, Gillis said. "When you start to jerry audit... you let those who committed fraud."
To growth
Of course, if not the United States for many years has not my own share of the shocking accounting fraud. In 2001 to 2002, a series of major scandals like enron and worldcom, and tyco shocked the American economy.
The legislation, strengthen the supervision and auditing and accountability system company officials. This did not stop the accounting fraud, but it can be more easy to identify and prevent some of the most shocking behavior.
In China, American companies are doing some very big bets, accounting risk a new areas.
A temptation, the United States the speed of economic growth is far more than the American company direct investment of 54 billion us dollars, enterprises in China, the factory and property, mostly in the past ten years, according to the U.S. department of commerce data.
Although China's economic growth in the last year's calm, the huge consumer class demand is still in the ascension income in the company range from starbucks coffee sellers (SBUX) casino operators WYNN resorts (WYNN).
Caterpillar's experience and is smaller, fraud and abuse the growing directory, there are some experts want to know, if the company's China performance you can trust.
Although the Chinese economy to a market economy transfer, business is still shaking hands, China experts said. State secrets law in survey of a stranger. Audit completed in China of the United States enterprise units with regulators in the us can not carry out inspection, because the Chinese government refused to let them.
A former executives in a large, headquartered in the United States multinational companies active in China recalled fired the company's auditor tried to correct improper accounting joint ventures in China. Try to book sales manager, early, sometimes not assembly products, in order to avoid increased taxation, administration, who asked not to be named said. He said he restore auditor and accounting change.
And Chinese joint venture trading is not the end, the headquarters is located in California RAE systems, which makes the chemical detection monitoring. It must be to the United States government pay nearly $3 million, in 2010, it does too little to stop joint ventures in China in bribes resolve complaints.
"Red ferrari 'TEST
Despite China's well-known risk, auditor often have curious enough warning of possible fraud, some experts say.
In China possible auditor hole tirelessly a file, but can't find red ferrari stopped at the door, don't ask it belong, it is how to pay, "Peter said, Humphrey, the founder of a ChinaWhys, based on Shanghai anti-fraud consulting company, white-collar crime and fraud investigation of multinational companies in China's score.
Chinese experts say, it is difficult to do business have met the requirements of gifts or kickbacks.
Transparency international supervision of corruption, investigated enterprise executives said, the Chinese enterprise in the 2011 second, second only to Russia company is most likely in the foreign corrupt practices.
But six American companies, including technical group of IBM (IBM) and the drug manufacturer Pfizer (PFE), has been charged with the United States securities and exchange commission in the past two years in China's improper payment or gift.
Retailers wal-mart (WMT) says it is investigating the accused of taking bribes in China and in other countries, and cosmetics group Avon company (AVP) treatment may be in China bribery detection.
Have a lot of other red flag. For example, American regulators to cancel the registration in the United States listed dozens of Chinese corporate fraud probe, some of the major American investors are a unprepared.
Billionaire hedge fund manager John Paulson (John Paulson) have suffered great losses after the disastrous bets on China's forestry company jia han forestry. Jia han forestry in 2011, it forged forest assets and filed for bankruptcy after the charges of the shock.
China's software company southeast accommodation financial technology (3 loa. SG) was accused of seize the audit files, headquartered in Shanghai



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