About $1 billion of shareholder wealth went up in smoke last week when GMT Research—a Hong Kong firm that tries to hunt down anomalies in financial reports—accused the Australian construction group Cimic Group Ltd. of using creative accounting to inflate its profits.
Cimic is controlled by Germany's Hochtief AG and contributes most of its earnings, while Hochtief is majority-owned by Spanish construction giant ACS.
Responding to GMT, the Australian company said its accounts were “fully audited and in compliance with the accounting standards.” The statement didn't appear to entirely alleviate the market's concerns, though, and perhaps that's no surprise. In one respect at least, those accounting standards aren't really comprehensive enough.
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