Jacky Lam’s resignation was effective on Sunday but his letter to the CCME Board was dated Tuesday, making us wonder if he slept on it for 48 hours just be sure he was doing the right thing.
March 15, 2011
The Board of Directors
China MediaExpress Holdings, Inc.
22/F Wuyi Building
33 Dongjie Street
As I informed the Board on Sunday, I have resigned as a Director and as the Chief Financial Officer of China MediaExpress Holding, Inc. (the “Company”), effective as of March 13, 2011. I have resigned because of information that I have learned in the past few days, and because the Chairman and CEO did not respond to these matters in a manner that I believed to be appropriate.
Thank you for your kind attention and I wish the Company success in the future.
Of course the “information that I have learned” could have been Roddy Boyd’s post from last Friday or the video of the sleeping staff posted Sunday or something else entirely. As far as the CEO’s inaction – should he have filled one of the broom closets with Red Bull? Maybe kept more of something else that apparently keeps people awake but otherwise uninterested in other humans? We’re not exactly sure on either of these questions but we’d love to hear theories.
In the wake of Roddy Boyd’s epic post from March 11th, China MediaExpress announced some bad news today – Deloitte resigned as their auditor effective Friday and as a result the company’s CFO, Jacky Lam, quit yesterday:
China’s largest television advertising operator on inter-city and airport express buses, today announced that the Company’s registered independent accounting firm, Deloitte Touche Tohmatsu (“DTT”) has formally resigned its engagement by the Company as of March 11, 2011. Following the receipt of the DTT resignation letter, on March 13, 2011, the Company received notice of the resignation of Jacky Lam from his position as Chief Financial Officer and director of the Company, effective immediately. As a result, CME will delay its fourth quarter earnings release and will not file its Form 10-K for the fiscal year ended December 31, 2010 by March 16, 2011, its original due date.
As you might have already guessed, Deloitte got spooked after all the fraud talk and they also came to the conclusion that management couldn’t be trusted (even if he did say great things about them):
The DTT resignation letter stated that DTT was no longer able to rely on the representations of management, and recommended that certain issues encountered during the audit be addressed by an independent investigation. DTT’s letter also stated that these issues may have adverse implications for the prior periods’ financial reports and that, in their view, further investigatory procedures would be required to determine whether the prior periods’ financial reports are reliable. Upon receipt of the formal DTT resignation letter, the Company requested the suspension of trading in the Company’s common stock on the NASDAQ Global Market to permit full disclosure of DTT’s resignation to be disseminated to the public.
So the company now needs a new auditor and a new CFO. Of course you’ll have to work around forensic accountants and a bunch of lawyers that will be helping the company through this little hiccough but otherwise, this should be a snap.
For anyone out there concerned about Chinese companies who have less-than solid accounting practices, you can rest easy, as Gary Weiss reported in his TheStreet.com column yesterday:
All you have to do is believe in the infallibility of Big Four auditors!
Responding to allegations that the company is a “fraud and reported revenue is exaggerated by tens of millions of dollars,” China Media’s CEO Zheng Cheng said in a letter to shareholders: “The company is strong and doing well. Its revenues and cash position have been audited by reputable and well-known auditors who have confirmed both.” [Emphasis is GW’s.]
With China Small-Caps, It’s Shorts vs. Auditors [The Street]