New Lies Emerge On Pingtan’s Secret Conference Call

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On May 10th we published a report exposing how Pingtan Marine (PME) has fraudulently financed international crimes including human trafficking and poaching while concealing rusting hulks that are now decaying inside abandoned fishing bases.

Pingtan subsequently issued a May 11th Press Release and held its previously scheduled May 16th earnings call, neither of which left us with much to respond to.  However, Pingtan has not disclosed that it held a secret Chinese conference call early on the morning of May 12th (U.S. time) in advance of its earnings release.

The call was led by Pingtan’s CFO, Roy Yu, who was previously the CFO of Lihua International (LIWA), a fraudulent equity that is now worthless. The call-in details were circulated on a Chinese message board where Mr. Yu is frequently posting.

Although the call ran over 90 minutes and included undisclosed declarations, no 8-K or press release was filed. We recorded the call and engaged a professional translator to create a rough transcript that can be found here.

Pingtan’s secret call appears singularly designed to fool Chinese retail investors with comically false statements. We suspect that Pingtan has failed to disclose the call’s existence so as to keep Mr. Yu’s comments from being scrutinized by analysts and regulators.

This report highlights some of the most egregious falsehoods advanced by Pingtan since our initial report was published.  We reiterate our research opinion that shares likely have zero value.

(Note: We engaged a professional translator to transcribe the call’s audio.  Because this transcript was prepared on an urgent basis, it contains grammatical and syntax errors. As a result, its contents should be considered an approximation of what was said.)

 “Nothing mentioned in the report is true. Everything in the report is fake. No claim is meaningful. The report uses several forged illustrations to discredit the company”- Roy Yu

Faced with irrefutable documents, photos, and video evidence, Pingtan’s CFO is now attempting to convince Chinese retail investors that “everything in the report is fake.” Even though Pingtan only holds $500k in unrestricted cash, Mr. Yu tried to bolster his claims by threatening that Pingtan will spend “$2 million” to sue us as part of a “joint lawsuit” to be purportedly filed along with other companies we’ve exposed.

Farcically, the entire premise of Mr. Yu’s argument is that “nothing in the report is true” and even “the photos are fake” and “forged.”  We find this assertion particularly humorous because the key photos in our report are sourced directly from media outlets such as CNN Indonesia, Detik News, The Sydney Morning Herald, and even Pingtan’s own promotional video.

The mountain of evidence we assembled during our investigation is meticulously sourced and linked throughout our report. Yet Mr. Yu seems to be harnessing language barriers to prey on unsophisticated Chinese investors.  We find it particularly telling that Pingtan appears unwilling to put its assertions in writing or in SEC filings that would have to withstand scrutiny from regulators and the broader investing public.

Above: Supposedly “fake” images sourced from CNN Indonesia and Detik News.

Other things we noted from the secret call include:

  • Mr. Yu appeared to mislead investors by falsely implying that its 10-Q financials are audited (they are not):  “our financial report will be released next Monday, as normal, according to our previously announced plan. So, from the other side, it proves that these things these organizations said are not true, because the auditors will check it after that, or do a research on it according to the procedures, and the report will be released if there is no problem.
  • Mr. Yu also appeared to hint that the forthcoming earnings announcement would exceed expectations: “the EPS guidance the company gave was 8 to 10 cents per share. Hope everyone pays attention to it. Personally I am very confident
  • “According to the report, the major investor of the company embezzles US$900 million cash from the headquarter of the company. I … I don’t really want to talk about this issue”. Mr Yu went on to feign ignorance of how the $900 million total was calculated, even though page 1 of the 10-K lists the bulk of the related party transactions we cited in our report.
  • Mr. Yu claims he cannot formally comment on the crimes that occurred at the Chairman’s bases because they are “not within the framework of the listed company”. That is false because Pingtan’s 10-K specifically states that “a large portion of our operations are conducted from a base owned by our related party PT Avona Mina Lestari” (Page 8) while the Investor Presentation highlights supposed “barriers to entry” that the bases provide.  Pingtan’s failure to disclosure a raid by the armed forces and criminal findings of fraud, human trafficking, and poaching, has concealed obviously material developments.

“Pingtan has not been cited by or had any action brought to it by the Indonesian government or any governmental body”- May 11th Press Release

This statement is an obvious falsehood because, as explained in our report, the Indonesian Minister of Maritime Affairs, Susi Pudjiastuti, has publicly declared she would report Pingtan to the NASDAQ.  The Minister said that “this could be our first international fraud case involving the NASDAQ” and that “there is no such company [Pingtan] in Indonesia.”

Source: KKP News

The facts show that Pingtan is deceiving investors by taking credit for vessels titled under related party companies controlled by the Chairman’s family, principally PT Dwikarya Reksa Abadi (“Dwikarya”) and PT Avona Mina Lestari (“Avona”).

Avona was raided by the Indonesian armed forces and Dwikarya was shuttered after being found by the government to have committed serious crimes including human trafficking, illegal fishing, fraud/forgery, and bribing corrupt officials. Consequently, a significant portion of these ships appear to consist of dilapidated vessels crumbling inside the now-abandoned bases.

Perhaps this explains why Roy Yu seemed to become unhinged when the topic of Minister Susi was broached:

She [Minister Susi] is all tattooed and uneducated, smokes cigarettes and gets drunk daily. She is a gangster, she used to run a protection racket. She trades in fish and wants to drive the price up by messing with the supply. She has told a lot of lies and given a lot of incorrect information to the relevant government bodies, from the get go, her MO was to use the excuse of illegal fishing to harass our ships and to stop us from fishing.

(Note: A Chinese researcher edited the transcript so as to clarify the commentary and the above represents an approximation of what was said).

Pingtan’s Ships are “fully licensed”

Pingtan has consistently told investors that it owns a “fully licensed” fishing fleet.  The purported licenses have been used to justify the $9.3 million per vessel valuation that Pingtan has paid to the Chairman’s companies in exchange for ships dating to the 1970-1980s. During the secret call, Mr. Yu defended the valuation by comparing the fishing licenses to taxi medallions:

Recently I have been to New York and got a taxi … a yellow taxi. I was interested in the taxi and asked the driver how much the taxi is worth. The driver answered its worth US$30 thousands but my taxi license worth US$1 million. The overall price of the taxi is above US$1 million. The key point here is the license. The fishing market is similar to the taxi market.

Pingtan recently posted Chinese government documents on its website as supposed evidence of its fishing licenses. But the principal problem is that the documents are Chinese authorizations that have no legal standing in foreign waters.

Pingtan knows it needs licenses from foreign governments to fish in their waters but seems to be trying to sow confusion amongst retail investors. Management has previously claimed to hold Indonesian fishing permits, even declaring in 2016 presentation (below) that “the Indonesian government’s anti-illegal fishing measures will be beneficial to fully licensed fishing companies such as PME.”

But this is a lie because the facts show that most of these licenses don’t exist.  As discussed in our report, Indonesian officials have made clear that Pingtan never held any licenses there. Pingtan’s Indonesian affiliates also appear to have operated without licenses for substantial portions of their fleet.  Dwikarya was specifically found to have bribed officials (page 3) while Avona made “gross falsifications of the boats certificates” (page 2).

As an additional example, Pingtan recently claimed that 13 of its newly built ships were deployed to Timor Leste pursuant to fishing licenses it was purportedly awarded.  But our report showed that the ships and licenses are held by Honglong (the Chairman’s company) and not Pingtan.  After these vessels were caught in February, 2017 with a “cargo hold stuffed with sharks” (confirmed by drone footage), the Sydney Morning Herald reported that the Timorese government had even “sought and received a written assurance Pingtan was not involved.”

Caught in an obvious lie, Pingtan updated its website after our report to claim that these ships are “in-process of transfer” to Pingtan.  

Source: Sydney Morning Herald


“We never cheat the investors or the institutions….Firstly, the Chairman Zhuo said that he would personally buy back the stocks from the market Yes, he is going to buy back the stocks in the market.” – Roy Yu

In addition to declaring that the Chairman would buy PME stock, Roy Yu claimed our report was purposefully timed for a blackout period when insiders could not make purchases.  We note that the Chairman made no mention of this commitment to purchase shares during the formal U.S. conference call and has not made any form 4 filings showing the promised share purchases.

We have no idea if the Chairman will buy back stock or not.  But we do know that Mr. Yu’s comments parallel similar promises of “transparency” and buybacks that he made to LIWA investors in 2011.

Mr. Yu resigned from Liwa in November, 2012 (page 15), well after fraud allegations began to surface in 2011.  The stock fully imploded in 2014 after a series of improprieties were revealed.   It is indisputable that investors who listened to Mr. Yu  in 2011 have lost their entire investment.

Above: Selected commentary from Roy Yu during LIWA’s 2011 Conference Calls.  Source: Bloomberg