Amd Commo Exagr Discussion Threads

[loverat] 29/10/2009 18:44

An amazing letter and for those who have not read it these are the findings of the new LDC/LAC board into what happened under previous management.




6. CAUSES FOR CONCERN

6.1 Bank Accounts
In September 2008, almost all LAC's funds were in the bank accounts of its foreign subsidiaries and associated companies, under the control of Mr Simon Littlewood and his wife, Josée Lai.

Mr Simon Littlewood resigned as a director of LAC on 25th July 2007 and so it was not proper for him to continue to control - to the exclusion of all other main board directors - the Company's cash and investments.
Mr Simon Littlewood failed to tell LAC directors of the locations of many LAC subsidiaries and associated company bank accounts and subsequently volunteered the minimum of information.

For example, the LAC directors believed that there were no bank accounts in Singapore, although LAC's wholly-owned Singapore subsidiary, London Asia Capital (Singapore) PTE Ltd, had bank accounts with DBS Bank, Fortis and UOB.
Your Board persuaded HSBC in Hong Kong and DBS Bank in Singapore to suspend local bank accounts and were able to send £500,000 back to the UK, thereby putting LAC in funds so that the Company could afford to run day-to-day activities and commence the forensic investigation necessary for the preparation of the accounts for 2007 and beyond.


6.2 Undocumented Transactions
With control of the bank accounts, it became apparent that large sums of money had entered, left and moved around LAC in a way that was not supported by proper contracts, invoices or proper business practice.

Sums due to one company had improperly been paid to others; in particular, funds due to wholly-owned subsidiaries of LAC were paid into companies in which LAC was only an 80% or even 40% shareholder. Many of the investments, particularly those in China, were held in a way that made it impossible to prove title. Some shares, which were the property of LAC or its subsidiaries, were held by private companies in China, with no adequate contract or other safeguard for the shareholders of LAC.

6.3 Loan of $5 Million Written Off
Our investigations have uncovered that on 7th September 2005, LAC plc sent $5 million to Nourican Adriatic d.o.o., in Zagreb, Croatia. The transfer document was signed by Mr Simon Littlewood. A signed contract confirms that the loan was to have been secured by a pledge over 25,000 shares in Industrogradnja d.d., but no signed guarantee or pledge has been traced.

The purpose of the loan was to help Nourican Adriatic d.o.o. provide evidence to the Croatian Stock Exchange (Zagrebaka Burza) that cash needed for a bid to be made by two Croatian companies for Industrogradnja was available. LAC was to receive a fee of US$ 1 million for this loan.
The bid for Industrogradnja was launched on 11th November 2005 at a share price of 650 Kuna at a discount to its market price of 810 Kuna. As a result, only 2,640 shares were tendered for at a total cost of $273,244. It appears that the $5 million loan provided by LAC was not used for the bid and should have been returned to LAC in January 2006, together with the $1 million fee.
We can find no evidence that this sum reached LAC, nor is there documentary evidence to show that steps were taken through the courts in any country to recover this money.
The transaction was managed by Mr Simon Littlewood, who has since commented that the "Croatian Mafia" has the outstanding $6 million belonging to LAC shareholders.

6.4 Share Swap Companies
In May and June 2007, LAC announced to the London Stock Exchange that it had issued in total 98 million fully-paid new shares (valued at approximately £10 million) to shareholders in four newly-formed companies, three in Hong Kong and one in Singapore, in return for a 40% interest in those companies ("Share Swap companies").

In each of the four Share Swap companies third-party investors held the remaining 60% interest. In aggregate, these third-party investors paid little more than £20,000 (twenty thousand pounds) for their investment, which effectively gave them collectively a 30% shareholding in LAC.
In breach of the Companies Act, no valuation of the Share Swap companies was obtained prior to their acquisition by LAC in May and June 2007.
Details of these share issues and of the acquisitions were described in the audited accounts for the year to 31st December 2006, and in company regulatory announcements to the London Stock Exchange. Applications were made for the shares to be dealt on AIM and a further review of the acquisitions was made in the 2007 interim results. These interim results showed that these valueless companies were purported to have increased the LAC Net Asset Value by £10.9 million, equivalent to almost 25% of LAC net asset value.
It was stated in the 2007 interim results that these Share Swap companies had a "combined capital value of over £27 million." The audited accounts of those companies demonstrate little or no value. At all relevant times these transactions were managed by Mr Simon Littlewood.

We succeeded in having the 98 million shares in LAC, referred to above, gifted back to LAC plc and cancelled at a Board Meeting held on 22nd May 2009, resulting in the number of shares in issue dropping from 327 million to 229 million, to the benefit of shareholders and increasing pro forma Net Asset
Value from 7.5p to 10.7p per share.

LAC is pursuing claims for up to £16 million against the four 60% shareholders in each of these Share Swap companies for the consideration they failed to pay on their shares. While it is unlikely that these claims will be met in full, we are confident that there will be a significant net financial benefit to shareholders in LAC.

6.5 Aborted Acquisitions Not Announced
In May and June 2007 announcements were made to the London Stock Exchange of acquisitions by the above Share Swap companies totalling £12 million. These appeared in the Chief Executive's Report in the 2006 Report & Accounts as signed by Mr Simon Littlewood and as a post balance sheet event note, in which shareholders were informed on various other matters, including:
 China Exchange Limited had acquired an 80% stake in SYGC
 China Exchange Limited had acquired a 40% stake in Xi'an Private Equity Exchange
 London Asia Limited had acquired a 51% stake in Jin Lian Ann Insurance Broker of Beijing
 London Asia Limited had acquired a 51% stake in Zhong Nan Auction House
The 2007 Interim Report also referred to these acquisitions. We are unable to find evidence that these acquisitions took place and they are not recorded in the audited accounts of those companies.
The first indication was an email sent in May 2008 by Mr Simon Littlewood to Moore Stephens, auditors to LAC, shown below:

No statement concerning these events was made to shareholders until the announcement made in my letter to shareholders on 7th May 2009, which meant that LAC was in breach of its obligations to the AIM market and gave a misleading impression of its financial status.

6.6 Diversion of Funds
In December 2007, London Asia Capital (Singapore) PTE Limited ("LAC(S)") was due £1.6 million from China Growth Opportunities plc in respect of performance fees. At the written instructions of Josée Lai, wife of Mr Simon Littlewood, these funds were not paid to LAC(S) but instead to London Asia Fund Management Ltd, a Brunei company in which LAC held 40% of the equity, while Mr Simon Littlewood and associates held the remaining 60% shareholding.
On receipt of these funds by the Brunei company, £401,440 was immediately transferred to each of Mr Simon Littlewood and a third party. In so far as the Directors are aware, LAC and its subsidiaries have no contractual relationship with that third party.


6.7 Improper Share Support Activity
Between December 2007 and April 2008, shares in LAC were purchased on the AIM market by the Company totalling 1.85 million shares. RNS announcements were issued stating they were to be held in Treasury. The majority of these transactions were arranged by Mr Simon Littlewood.

Your Directors have been advised that these purchases were illegal because LAC did not have sufficient distributable reserves and was therefore in breach of the Companies Act. While Mr Simon Littlewood was a Director of Huang He Securities Ltd, one of the Share Swap companies mentioned earlier, instructions were given for the purchase of 2.5 million shares of LAC in 2007 and 2008. The cash to buy these shares came from London Asia Investments (Hong Kong) Ltd ("LAI(HK)") and thus the transaction was circular. The effect was to artificially support LAC's share price which was in breach of the Companies Act.

6.8 Substantial sums of circa £50 million which passed through the accounts of LAI(HK)
Since March 2006 Mr. Simon Littlewood has served and continues to serve on the Board of CGO, previously called London Asia Chinese Private Equity Fund plc, which invested heavily in China and Asia, raising and investing circa £50 million.

We have discovered that the cash for these investments made by CGO passed through the bank accounts of LAI(HK). LAI(HK)'s records do not provide full transparency for these arrangements and neither can all such sums be validated.
Commissions received by LAI(HK) from CGO for both managing and investing the fund were paid away and could not all be reconciled from the information available.

Pursuant to the cooperation agreement referred to in paragraph 5 above, LAC asked CGO (including Mr Brett Miller) for details of the substantial commission payments, but in breach of that agreement CGO withdrew and refused to provide further information, frustrating our efforts and further delaying the preparation of the Accounts of LAC.

6.9 Shares Held in Trust in China
LAC has significant shareholdings in unquoted Chinese companies. It is now clear that, with the exception of Zhongying and Biaoqi Tienfeng, the shares are not held directly by LAC or its subsidiaries but instead are held in trust by a Chinese private company under an informal arrangement with no proper documentation or trust documents. LAC and its subsidiaries may therefore have paid substantial sums in shares for investments where proof of ownership is uncertain.

6.10 China Financial Services
China Financial Services ("CFS") was one of LAC's early investments, and paid substantial dividends. CFS provided real-time information on securities and analysis software to support investors to buy in the stock market. We understand that CFS was prepared for a public listing in 2006. As at 30 June 2007 the fair value of this investment of £4.76 million was included in LAC's interim results.

Your Directors have now discovered that in the summer of 2006, the China Stock Exchange announced that it would no longer provide free market data and as a result the business of CFS rapidly collapsed.

In calendar year 2006, CFS's revenue was £2.78m and pre-tax profits £1.97m. Based on the information available, the revenue in 2007 was £227,873 and the losses amounted to £1.34m. In the first half of 2008, CFS had no revenue and lost £841,103. It is believed the business has since ceased operating.
In 2007, LAC announcements were made to the London Stock Exchange concerning CFS but none indicated its rapid trading decline. The last statement included in the Offer Document referred to below mentions "the confidence we have in CFS`s expansion strategy". Failure to keep shareholders and the market informed is in breach of the AIM rules.

6.11 Sale of Shares in Investee Companies by LAC
On 5th October 2007 London Asia Corporate Finance Limited (an FSA-regulated corporate finance company headed by Mr. Simon Littlewood) authorised the issue of an Offer Document, which stated that six LAC portfolio investments valued at £7.7 million were being offered to LAC shareholders at a discounted value for a direct investment therein.

The Offer Document stated the portfolio investments being sold represented "less than 10% of the LAC balance sheet as at 30th June 2007" and went on to state "should the Offer be taken up in full there will be a realised profit on disposal of over £1.5 million."

Your Board could not reconcile these holdings to the books of LAC and have subsequently discovered that some of the shares offered belonged to Third Parties. The Offer Document makes no such reference to Third Parties and indicates that all the shares on offer were owned by LAC and related companies.
On 30th October 2007 LAC announced, "There was a strong level of interest shown in the Offer, with offers made for a total of £3 million worth of shares, out of £7.7 million on offer. The total sold represents 7% of LAC's reported net asset value as at 30th June 2007. Based on the original cost of £1.4 million, the profit on sale against original cost amounted to approximately £1.5 million." Of the purported £3 million sales proceeds, less than £700,000 has been traced.

Failure to keep the markets and shareholders informed is in breach of the AIM rules.

[loverat] 29/10/2009 06:35

So, the 'Croatian Mafia' has 6 million dollars of LDC shareholders money.

Utterly unbelievable.

What the hell was the man thinking of?

And what the hell were the other 'distinguished' directors doing at the time?

Jack Wigglesworth – aged 68

Jack Wigglesworth had a distinguished career in the City of London. He was formerly Chairman of the London International Financial Futures and Option Exchange (LIFFE) and held numerous senior executive positions including ABN Amro, Philips & Drew and JP Morgan. From 1987 to 2001 he served on the Authorisation Committee and Individuals Registration Panel of the Securities and Futures Authority (SFA), where he was closely involved in assessing more than 1,350 firms of companies and over 45,000 individuals. He was also a member of the SFA's Enforcement Committee. He was a founding Member of the Board of Directors of the Securities Institute, Chairman of Hackney's Education Action Zone and a Director of the Financial Services Training Organisation. Jack was also the former Deputy Chairman of UK-listed investment bank Durlacher Corporation plc (now part of Panmure Gordon). He is a Director of Gresham College and on the board of several private companies. Jack graduated in Philosophy, Politics & Economist from Oxford University.


George Allnutt – aged 63
Mr Allnutt has had a distinguished career over the past 30 years and has developed several successful UK electronic and engineering businesses, as well as developing a portfolio of commercial and residential properties. He is currently chairman of Photo Distribution Limited, a UK logistics business, Managing Director of Penhale Estates Limited, a non-executive director of Commodity Growth Plc, non-executive director of Dalian Business Institute, a director of Meterwait Limited and a director of Bournemouth Education Limited

[loverat] 29/10/2009 04:41

The transaction was managed by Mr Simon Littlewood, who has since commented that the "Croatian Mafia" has the outstanding $6 million belonging to LAC shareholders.



So, a loan to the Croatian Mafia - this gets more interesting. Interesting too that we have had a few readers from Croatia.

Still, that's what you get when you are stupid enough to get involved in a country rotten to the core.

[loverat] 29/10/2009 04:33

6.3 Loan of $5 Million Written Off

Our investigations have uncovered that on 7th September 2005, LAC plc sent $5 million to Nourican Adriatic d.o.o., in Zagreb, Croatia. The transfer document was signed by Mr Simon Littlewood. A signed contract confirms that the loan was to have been secured by a pledge over 25,000 shares in Industrogradnja d.d., but no signed guarantee or pledge has been traced.

The purpose of the loan was to help Nourican Adriatic d.o.o. provide evidence to the Croatian Stock Exchange (Zagrebaka Burza) that cash needed for a bid to be made by two Croatian companies for Industrogradnja was available. LAC was to receive a fee of US$ 1 million for this loan.

The bid for Industrogradnja was launched on 11th November 2005 at a share price of 650 Kuna at a discount to its market price of 810 Kuna. As a result, only 2,640 shares were tendered for at a total cost of $273,244. It appears that the $5 million loan provided by LAC was not used for the bid and should have been returned to LAC in January 2006, together with the $1 million fee.
We can find no evidence that this sum reached LAC, nor is there documentary evidence to show that steps were taken through the courts in any country to recover this money.

The transaction was managed by Mr Simon Littlewood, who has since commented that the "Croatian Mafia" has the outstanding $6 million belonging to LAC shareholders.

[loverat] 29/10/2009 04:30

I bet that one will go down well with shareholders considering he contributed to this sorry mess.

Here, I have proposal of my own. Vote down these proposals and keep all the directors EXCEPT Allnutt.

[loverat] 29/10/2009 04:27

And this is a laugh. QVT asking for the resignation all directors except Negal
AND GEORGE ALLNUTT.

QVT is asking shareholders to pass resolutions for:

 the immediate but orderly realisation of the existing portfolio of investments to be completed no later than June 2011, and the immediate instigation of a programme of progressively returning cash to shareholders at or near the prevailing Net Asset Value per share from existing cash resources and the net proceeds of realisations

 the removal of five existing directors of the Company ("Directors"); chairman Jack Wigglesworth, finance director Toby Parker, chairman designate The Earl of Cromer, Dennis Bailey and Francesco Gardin

 the appointment of Brett Miller, Rhys Davies and Gavin Burnell (together the "Proposed Directors") to the LAC board as directors
The only directors unaffected by the Requisition are chief executive Keith Negal and George Allnutt. Under company law, LAC is obliged to put these resolutions (the "Requisition Resolutions") to a General Meeting (or "GM").

[loverat] 29/10/2009 04:24

Well, here we are. Another letter from the LDC into the activities of Simon Littlewood.

Shocking stuff.

[loverat] 28/10/2009 18:47

Well, my posts here, the previous thread and LDC go back to December 2008. I expressed my concerns about the management here and their posting activities which I think most people would have disapproved of. In July 2009 presumably there was a request to knock up a quick website to communicate a message from the CEO.

Now, Anomalous who has famously set up action group websites for defrauded investors decides to set up a website for directors who are implicated in this mess.

I guess Anomalous has complete confidence in the integrity of these people so I am sure we can all rest assured that they are all innocent and they are as shocked as we are at the recent bizarre events.

[tarvold] 28/10/2009 07:17

I'm sure it was done for gratis.

[loverat] 28/10/2009 06:34

Anomalous - 8 Jun'04 - 22:11 - 158 of 243

Don't let the website put you off. I know the people behind this company and I can assure you they are first rate businessmen. I'd rather they were spending money on the investments and turning the business into a succesful venture rather wasting it on a flashy shop front.


Seems what COMG shareholders have ended up with is an unsuccessful venture and a flashy shop front. Oh well - I suppose shareholders should be grateful for something.

[loverat] 28/10/2009 05:12

Well, the directors must have asked Anomalous to knock up the website as he is accomplished at this type of thing. Just a shame it was in these unfortunate circumstances.

One suggestion from a PR point of view - don't use such smug and attractive people when delivering a message which many will view as bad news - or a load of old codswallop. It almost gives the impression that the people running the company were not idiots.


Anomalous - 8 Jun'04 - 22:11 - 158 of 243

Don't let the website put you off. I know the people behind this company and I can assure you they are first rate businessmen. I'd rather they were spending money on the investments and turning the business into a succesful venture rather wasting it on a flashy shop front.

Personally, I could knock up a decent website for them in a few hours and might have the time to do it for them in a few weeks. The important thing is that they are holding the discussions to acquire the growth in China. Victor Ng will get the best price he can and Simon Littlewood is a genius at finance. James Holmes will steer the company through the initial business and into comfortable profitability.

In my honest opinion, anyone getting in today at these prices will be like the people who bought YOO at 0.4p, laughing all the way to the bank.

[loverat] 28/10/2009 04:40

Don't worry folks - managed to work it out.

So - Anomolous registered the website.

Domain name:
commoditygrowthplc.co.uk

Registrant:
Nigel Smith

Registrant type:
UK Individual

Relevant dates:
Registered on: 21-Jul-2009
Renewal date: 21-Jul-2011

[loverat] 27/10/2009 18:49

Yes - very attractive - all three of them. James are they the new directors of COMG?

[loverat] 27/10/2009 18:43

Over the next few days we will be discussing this message from the CEO.

A Message From The Chief Executive Officer

We are writing to update shareholders on progress at Commodity Growth plc, formerly Europasia Education plc (EPE). You will recall that the current board were appointed in 2003 following a succession of losses in the company including losses in 2002 of £2.2m. The board implemented a new strategy, raising in excess of £1.5m from investors in a series of funding rounds and re positioning the company as a pioneering education investment company focused on the fast growing Chinese market where the company opened a representative office. The company purchased 100% of Management International, a vocational and business training organisation and English 2000 a leading English language school. In addition, we established "Hello English" as a joint venture which went on to develop radio based courses in China which attracted an estimated four million participants, the largest non governmental training programme in the world. These successes led to Consultancy work for the Group including with the BBC to develop English language courses and with a number of Chinese Colleges.

After careful research, the company made two very important strategic investments. the first was in the Shandong International Institute for Translation which was purchased by Europasia Beijing and in which EPE had a 15% stake having invested £156,000 in cash and a much larger amount in shares. EPE Beijing was subsequently listed on PLUS market in London with a new ultimate holding company, China Education Group plc. Our investment at the time and subsequently helped to develop a second campus of 22,000 square metres of lecture rooms, libraries and student accommodation, boosting student numbers by over 3,000. The value of our investment, reflected in the PLUS listed shares rose by 160% at their height.

Building on this success, the company then invested to take a 10% stake in the Dalian Business Institute. As with the previous investment, the College was assisted in the development of new courses, marketing strategies and accounting systems and with a listing onto PLUS. The number of students rose by over 1.000. EPE increased its stake by another 5%. At its height, this investment produced a return in the form of PLUS shares of 109% for EPE

The loss in EPE of £2.2m in 2002 was turned into an audited profit of £1.1m for the financial year 2006.

Despite these achievements, the company was not able to translate the success into a rising share price. A consolidation, press coverage and private client broker tours failed to address this. The company was unable to raise additional sums needed for the next identified investments and so a decision was taken to alter the focus in order to continue growth. Victor Ng, an EPE Director devised the new strategy. The company would remain a China focused investment business but would concentrate on commodities. A new management team of four was recruited to run the business in China. Each of the four had the background, experience and contacts in the industry needed for the strategy. Benson Day was recruited as Chief Executive Officer, the London office was closed and a new office opened in Singapore where Benson Day was based. James Holmes, stepping down as CEO, joined George Allnutt as a non executive Director. The new management team announced the first investments had been identified and due diligence was underway. In the course of the following months the company moved back from profit to loss and the quote on AIM was ended. These events led to the resignation of the management team, then the new CEO and then Victor Ng.

These events have left the company in a difficult position. There is no longer an office or administrative base and there are now significant accrued interest payments due to loan note holders which will make a re-admission to the market and a fundraising difficult. The non executive directors have had to temporarily reassume executive functions in order to manage the portfolio and negotiate with the loan note holders. If these negotiations are successful, the directors plan to consult with shareholders on ways to develop the business and restore value to shareholders.

James Holmes

Chief Executive Officer

20 July 2009

[loverat] 27/10/2009 18:33

And another question. The Commodity Growth PLC website. Can someone tell me who registered this website and when. Not a quiz but a genuine question from someone who genuinely struggles with IT stuff.

[loverat] 27/10/2009 17:40

egoi

A question - which shares do you actually hold? LDC or COMG or both.

[loverat] 26/10/2009 22:22

Well, that was 80's night.

Goodnight all.

[loverat] 26/10/2009 22:20

Or the gormless idiot playing space invaders.

[loverat] 26/10/2009 21:35

Some music.........and what a laugh!

[loverat] 26/10/2009 19:23

Well, now I have got that anology off my chest let's get down to the matters in hand.


No responses yet again from Cougar6 - as far as I can see anyway. Is he posting his replies in invisible text?

[mack7heknife] 26/10/2009 08:05

"It's only a small punt and I've more than covered this with the CYH rise today."

crikey looks like he made a claim even though he made no loss!!!!!!!!sound familiar ?

"we'll all club together to get the poor
chap a psychiatrist. He's obviously 'lost the plot' and needed sectioning for his own protection. Maybe we should do the same
with ours? At least we could allow him to knit his own straight jacket!"

I cant possibly comment .