China’s Alibaba Discovers Possible Accounting Fraud in Newly Formed Film Unit
Alibaba Pictures, the recently formed film production arm of the e-commerce and entertainment giant, says it won’t be able to publish interim results on time
Alibaba Pictures, the recently formed film and TV production unit of the e-commerce and entertainment giant Alibaba, said it had discovered a possible accounting fraud and won’t be able to publish its interim results on time.
Executives at Jack Ma’s company said in a filing to the Hong Kong stock exchange that they had identified possible “non-compliant treatment” of financial information for periods before its acquisition by Alibaba.
Alibaba Pictures may also not have made enough write-downs for some assets in the first half of the year, the filing shows.
Alibaba is planning to make what is shaping up to be the largest technology debut in history, when the company makes its initial public offering in New York, which could raise $20 billion, and has been on a major spending spree, buying $5 billion worth of companies in the last year, according to Bloomberg data.
Earlier this month, Alibaba invested $120 million in free-to-play company Kabam in the San Francisco Bay area-based mobile games company Kabam Inc.
Last month it signed a strategic collaboration with Lionsgate to offer its titles in China, including Divergent and The Twilight Saga: Eclipse and TV shows such as Mad Men, Weeds and The Royals.
In June, Alibaba bought 60 percent of ChinaVision Media Group in Hong Kong for $804 million and renamed the company Alibaba Pictures Group Ltd. It then poached Zhang Qiang, second in command at China Film Group, to run the new production studio.
In June, Alibaba Pictures appointed Shao Xiaofeng, Alibaba Group’s chief risk officer, and vice president Liu Chunning to its board. Actor Jet Li is also on the board.
“Alibaba Group fully supports the new management of Ali Pictures as they thoroughly review and rectify the possible financial non-compliance they have found with the former ChinaVision,” the company said in a statement.
It is lining up a slate of films with the In The Mood For Love director Wong Kar-wai, and also has an agreement with Taiwanese director Giddens Ko.
The company is entitled to 30 percent of the investment return from Stephen Chow‘s blockbuster Journey to the West: Conquering the Demons.
Shares of Alibaba Pictures were suspended from trading from 9 a.m. in Hong Kong today until further notice.