Shares of Asustek hammered by scam probe; Asustek had applied environmental protection certification labels used on old models to new products, a way to win more than NT$10 billion-worth of contracts with the government

Shares of Asustek hammered by scam probe

CNA
October 24, 2013, 12:07 am TWN

TAIPEI — Shares of Asustek Computer Inc., one of Taiwan’s leading personal computer vendors, fell sharply Wednesday as the local media reported that prosecutors had launched an investigation into an alleged scam involving the company, dealers said. After the negative leads surfaced, the stock faced heavy downward pressure upon market opening and fell almost 5 percent to the day’s low of NT$213.50 (US$7.26) at one point before rebounding.By the end of the session, Asustek shares had lost 2 percent to close at NT$220.00 with 5.99 million shares changing hands, while the weighted index on the Taiwan Stock Exchange ended down 0.29 percent at 8,393.62.

According to the Apple Daily report, Asustek had applied environmental protection certification labels used on old models to new products, a way to win more than NT$10 billion-worth of contracts with the government.

The reports said prosecutors suspect that Asustek Vice Chairman Jonathan Tseng is involved in the case and have accused the company of violating the Government Procurement Act to secure large orders.

As Tseng is currently leading an Asustek delegation to Moscow to unveil the company’s new products in the Russian market, prosecutors have so far summoned various Asustek representatives for questioning, the report said.

The Environmental Protection Administration said that as Asustek was found to have been using invalid energy-efficient certificates to bid for government contracts in February, it has been barred from filing for new certificates for one year.

In a statement, Asustek accepted that the company has been barred from applying for new certificates between Feb. 6, 2013 and Feb. 5, 2014.

Asustek said the case is not expected to impose any material impact on its operations and shipments.

Market analysts said the report dealt another blow to the company at a time when global PC demand remains weak, adding that shares of Asustek are expected to face further downward pressure amid continuing weak sentiment.

According to Digitimes Research, global notebook computer shipments for the fourth quarter are expected to fall 3.2 percent from the third quarter and to drop 13.4 percent from a year earlier.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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