Rainbow Refinement: Contract black holes hide big risks

Dinosaur Data Senior risk analyst Li Shujun "risk public opinion" risk Index ★★★★★8 Month 4th, the suspension of nearly 5 months of the Rainbow refined release self-examination bulletin, its 2 billion yuan major contract, in addition to April 18 and SMIC signed 510,000 yuan "purchase and sale contract", the rest are declared lifted. According to investigation, March 2, 2011, Rainbow Refinement to the outside disclosure of holding subsidiaries Rainbow Green World with 4 buyers signed 4, a total of 2 billion yuan of large sales contract. These four orders were: 2Degrees signed with the full degradation of the meal box purchase contract amount of 190 million U.S. dollars; with the Star International signed plastic card Board contract amount of 83.27 million U.S. dollars; buy BM-BF degradable fiber material and PBM-PP full degradable injection molding material, the agreement amount is 209 million yuan; SMIC buys fiber tray　　(double-sided) and electronic products pallet, the total amount of the agreement is 32.58 million yuan, the contract is valid for 12 months. Significant positive caused market concern, but also because of the large amount of market parties to the contract can be normal performance of the query, Rainbow Refinement in March 8 suspension and the regulatory requirements under the self-examination.　　April 19, the company was filed for investigation by the SFC. For the specific reasons for the disclosure, Rainbow refined Dong Li Huachun explained that the above four projects are the Rainbow Green World of another shareholder in Shenzhen Green World in operation, Rainbow Refinement has not been directly contact with the other side of the contract. Although Rainbow Refinement has been previously informed of the expected envelope material, it is still not available on time.　　Until the disclosure of information, both sides had to communicate through telephone confirmation, resulting in errors, in the self-examination process, in accordance with the procedures of the relevant departments for repeated checks, so time has been extended.　　Although with the results of the self-examination also disclosed by the holding shareholder additional restrictions on the commitment of the announcement, but investors to the company such a "hedge" type "good" is not to buy, the company's share price after a second consecutive day fell.　　"Risk Alert" rainbow Refined information Disclosure file loopholes, a short period of 2 billion yuan order shrunk into 510,000 yuan, the agreements have been announced to lift, internal self-examination suspended for five months, the stock rose sharply, rainbow refinement so many bizarre chaos, what is exposed and contains the risk of loopholes? --The Information disclosure document of 2 billion yuan intentional contract, which is suspected of false information disclosure, has been strongly questioned by many media about its authenticity and preciseness, and it has proved that the media and investors ' questioning is not groundless. Rainbow Refined self-examination admits: 2 degrees of the establishment of the time and the registered address is incorrect; will be the Star international mistakenly written as "Jiaxing International", the registration address translation error, the shareholder name, the number is completely wrong; the shareholders in soda were in error, and one of them was not formally changed to be a shareholder in the announcement. Because the company's information disclosure did not disclose the time of signing separately, but unanimously disclosed as February 27, 2011, resulting in four of the date of the signing of the agreement was disclosed incorrectly.　　Clearly, the above "mistakes" have been suspected of constituting a false statement. Meanwhile, the RainbowRefined denial by soda, Yongkang Green World and Rainbow Green World, Shenzhen Green World there is a correlation.　　Another media said that four companies have 2 billion yuan orders specifically set up the suspicion, if the verification is true, rainbow refinement is also suspected of false statements. As a public company, the disclosure of information should be true, accurate, timely and complete.　　If incorrect or improper disclosure of information, not only disturb the normal order of the securities market, but also seriously infringe on the legitimate rights and interests of investors, companies and related responsible persons must suffer the corresponding punishment.　　Rainbow refinement for such critical information, however, due to the "negligence" of low-level errors, has fully exposed the rainbow refinement of the existence of information disclosure system, the confusion of work procedures, staff capacity is poor, internal information communication is not smooth, and lack of internal information audit confirmation procedures and many other information disclosure management risks and loopholes.　　--Contract management risk is very prominent announcement, the four companies set up a shorter time, and Rainbow Green World is the first cooperation, Rainbow Green World in signing or audit contracts, also did not register information, performance capability, integrity and other relevant information to be investigated. At the same time, the implementation of the contract, 2 Degrees, Star International for downstream customers and cost reasons for the cancellation, and the Rainbow Green World has been fully prepared for performance and paid the performance costs, Rainbow Green world to avoid the loss of expansion, and choose "forced" to agree to the cancellation request.　　With regard to the lifting of the consequences, the Rainbow Green World has not claimed any other compensation, except that the unfinished part of the meeting is no longer fulfilled and the part of the performance has not been returned. For such a major contract, the Rainbow Green World chose to set up a shorter time, no transaction records of companies, how to protect the other party's qualification and credit? Before signing the contract, does not carry on the thorough investigation to the transaction object, how to ensure the opposite party main body qualification is suitable, how to guarantee it to have the performance ability?　　Such a major contract, it is necessary to hire a professional body to conduct due diligence, and the current self-examination report can only prove its original imprudence.　　From the unanimous agreement of the parties to terminate the contract unconditionally, it is clear that the rainbow Green World does not have a comprehensive consideration of the contract, performance, relief and other risks, even the contract design may be flawed, so that the loss can not be relief. Contract management includes not only the risk control of the contract content itself, but also the complete dynamic process from the beginning of negotiation to the signing and fulfillment until the contract relief. Therefore, Rainbow refined contract management risk is very prominent.　　If so many risks erupt, there will be a domino effect. --insider trading risk Although the rainbow refinement in the self-examination has been mistaken and explained, but according to the dinosaur (kolong) data monitoring, starting from October 18 last year, the performance of mediocre rainbow refinement began to gradually increase; and Shenzhen Green World signed cooperation agreement the day, the company's stock price breakthrough early highs began to pull up 3 months later, Rainbow refinement announced 2 billion orders, at this time the stock price is 3 times times the original! Sudden billions of orders, the stock price even hit a record high, but after the order fell through, but several fall.　　In response to the occurrence of the incident and the bizarre trend of stock prices, the news leaked, insider trading, the question of four, the public believe that the rainbow refinement of the suspected use of insider information artificially manipulate the share price, deliberately spread good news, pull high prices and then profit from it. In response to the above incident, the SFC on April 29, 2011 to the Rainbow Refinement issued a case investigation notice, the company and related personnel "suspected violations of China's securities laws and regulations" of the case for investigation, as of now the investigation work continues.　　If the irregularities are verified, rainbow refinement and related liability may be difficult to escape the risks of administrative punishment, criminal liability and huge investor claims. Crisis risk management insufficient rainbow refinement in the four orders after the media questioned, timely clarification is necessary, but its self-examination for up to 5 months, its understatement of the "fault" reasons, it is difficult to dispel the doubts and anger of investors.　　Visible, rainbow refinement crisis management ability is low, and disregard investor interest.　　As a result, we also have reason to believe that once the rainbow refined into a vicious crisis, its weak crisis risk coping ability, may lead to its fate. --Internal control system imperfect although the direct contact with the contract is not rainbow refinement, but as the parent company and controlling shareholder, Rainbow Refinement to the subsidiary of the important decision, should fulfill the obligation of supervision.　　Obviously, the rainbow refinement has not fulfilled these obligations. In addition, according to the information disclosed, the contract negligence was caused by the staff of the Rainbow Green World, a member of the Shenzhen Green World, and the Rainbow Green World itself was not involved.　　The major contract matters are completely arranged by large shareholder, which indicates the independence of Rainbow Green World of the subsidiary company of Rainbow Refinement, and further explains that the internal control system of rainbow refinement is imperfect and the internal control system is not well built. --The risk of brand crisis shows rainbow refinement can be listed, access to the investment of investors, and in the eyes of investors and customers to establish their good brand image, it is not easy. Rainbow Refinement unexpectedly in this value of 2 billion yuan of the contract review LAX, so that in the information disclosure of such low-level mistakes, and even suspected of the existence of insider trading bad practices, making rainbow refined integrity brand image in the eyes of the vast majority of investors, and as the company's credibility declined,　　Rainbow Refined brand crisis risk will be further demonstrated. Of course, the risks disclosed above may be the "tip of the iceberg" of the risk exposed by the rainbow in the "Contract gate", and the answer may soon be revealed as to what kind of risk puzzle the Rainbow Refinement also "contains".