In the litany of accounting problems emerging at Chinese companies, Hong Kong-listed China Animal Healthcare has managed a first: losing five years of financial statements midway through a forensic audit ordered by regulators.
The animal drug manufacturer, which is 20 per cent owned by US pharmaceuticals group Eli Lilly, said in a statement the documents went missing when a truck that was transporting them to its head office in Beijing was stolen earlier this month while the driver was having lunch.
The Eli Lilly subsidiary that invested in CAH said it was "concerned" by developments following the suspension of trading in the company's shares in March, and had "urged the board and company chairman since that time to take steps to properly resolve the situation".
The truck was recovered days later by local police in the city of Baoding, in north-east China, but the financial statements, which were being sent from the company's records centre to assist with the audit, were nowhere to be found.
The company said the probability of recovering the documents, which included the current year's books as well as those for the previous four years, was "not high".
But it suggested there was no internal foul play, saying that "no suspicious person has been identified in the incident" and that local police say such thefts are a "common occurrence" in a place that is best known for being China's most polluted city.
CAH has suffered a growing list of problems since trading in its shares was halted after it failed to publish its 2014 annual results on time.
Chinese officials withdrew some of its production permits in October because of concerns about factory pollution and the Hong Kong stock exchange is requiring it to complete a forensic audit into an allegation of employee misconduct, among other issues, before share trading can resume.
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The situation underlines the risks for investors in Chinese companies that promised fast growth and initially delivered stellar equity performance but lacked corporate governance. A growing number of companies have seen their weaknesses exposed as the growth in the world's second-biggest economy has slowed and investors and regulators have begun asking more questions.
The founder of Hanergy Thin Film, who was briefly China's richest man, this week said he would sell a 6 per cent stake in his company at a 95 per cent discount to the last traded price — valuing the solar power group at about one 40th of the $40bn it was worth at its peak — as it faces a regulatory investigation and scepticism over its business model.
Another troubled company, China Shanshui Cement, which in November became one of a growing number to default on its local bonds, revealed this week that some of its corporate records as well as its all-important company stamps had gone missing.
It also said it had been locked out of its computer system after several directors were removed from the board at a shareholder meeting earlier this month.
he problems at CAH, which has a market capitalisation of about $1.3bn, are embarrassing for Eli Lilly's subsidiary, Elanco, which called the company a "local industry leader" when it invested $100m in 2013 in a deal it said reinforced its "commitment to China's efforts to ensure food safety and enhance food security and rural income".