China Integrated Energy Inc. Completes Independent Investigation
XI'AN, China, May 24, 2012 /PRNewswire-Asia/ -- China Integrated Energy, Inc. (OTC Pink: CBEH) ("China Integrated Energy" or the "Company"), a leading non-state-owned integrated energy company in the People's Republic of China, today announced the completion of the thorough Independent Investigation conducted by the Audit Committee into allegations raised in reports published in early 2011. Although the specific findings and conclusions of the Committee, as advised by its legal and forensic accounting professionals, remain privileged, the Company announced that the Committee has informed it that the Committee is satisfied that the vast majority of the short sellers' claims were baseless. Based on its investigation, however, the Committee has made observations, primarily regarding strengthening internal controls, which the Company will actively pursue.
Beginning in March 2011, short sellers calling themselves Sinclair Upton and Alfred Little published claims that China Integrated had made misrepresentations or other alleged wrongdoing regarding (1) cash in the bank, (2) related party transactions allegedly benefitting the Company's Chairman and his family, (3) the Company's overall financial health, as demonstrated by differences between Chinese filings with the SAIC and US filings with the SEC, (4) certain accounting practices, (5) the value and ownership of gas stations owned or leased by the Company, (6) the Company's affiliations with educational and research institutions, (7) the Company's auditors, (8) whether the Company enjoyed certain tax exemptions, (9) the Company's licenses , (10) the VIE structure, (11) the Company's wholesale distribution network, and (12) the Company's production of biodiesel.
In May 2011, the Audit Committee engaged Shearman & Sterling LLP to lead the independent investigation into these allegations. Each of these allegations was thoroughly investigated. While some issues remain as to production at the Company's Tongchuan biodiesel facility, and while the investigation revealed the need to strengthen internal controls and take similar measures, the primary substance of all other allegations has been proven groundless. Sales of biodiesel accounted for approximately 17% of the Company's revenue in FY2010. The Committee applauded the Company for its full cooperation given throughout the investigation.
Speaking on behalf of the Company, its Chairman, Xincheng Gao, stated: "We are heartened, but not surprised, to hear the Audit Committee's conclusions. From the day the short sellers issued their attacks, we have consistently and vehemently denied them. Unfortunately, in this climate, people like the short sellers can say anything and then it is up to the Company to prove its innocence. While we are happy that we have been able to do so, the effort has cost the Company, and therefore its shareholders, a great deal. We are of course struck by the fact that the short sellers accused us of making false statements to benefit ourselves financially, when, in fact, that is precisely what the short sellers did. We will continue to defend ourselves and also continue to work with the Audit Committee to resolve any remaining issues regarding biodiesel production. We also appreciate that this thorough evaluative process inevitably and productively leads to useful recommendations, which will make our Company stronger and even more responsive to the interests of its shareholders."
About China Integrated Energy, Inc.
China Integrated Energy, Inc. is a leading non-state-owned integrated energy company in China engaged in three business segments: the production and sale of biodiesel, the wholesale distribution of finished oil and heavy oil products, and the operation of nine retail gas stations. The Company operates biodiesel production capacity within two plants located in Tongchuan, Shaanxi province, and one plant in Chongqing, China. The Company utilizes a distribution network covering 16 provinces and municipalities, established over the past 11 years, to distribute both heavy oil and finished oil, including gasoline, petro-diesel, and biodiesel. For additional information on the Company, please visit http://www.chinaintegratedenergy.com.
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Safe harbor statement
This news release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future use of the proceeds are forward looking and subject to risks. China Integrated Energy, Inc., may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q, and 8-K in its annual report to shareholders, in news releases and other written materials and in oral statements made by its officers, directors, or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement, except as required under law.
For more information, please contact:
Mr. Chen Yuanyuan (English and Chinese)
Mobile +86 139 2337 7882 in China
Mr. Tom Myers (English)
Mobile +86 139 1141 3520 in Beijing
SOURCE China Integrated Energy, Inc.