Chinese firm backed by Morgan Stanley disputes overstating profits, cites outdated records

MarketsAssociated Press

A $5 billion Chinese chemical company backed by Morgan Stanley says local government officials in China have agreed to change official records about the company's origins and source of its key assets.

The Associated Press cited those records in an investigation that revealed discrepancies between financial records and what Tianhe (TYEN'-huh) Chemicals Group Ltd. told investors as part of its $654 million public offering. Tianhe said the records were out of date and that officials have agreed to update them.

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The AP has been unable since Monday to contact government clerks who would be responsible for changing those records. The records had identified one of Tianhe's predecessor companies as Chinese government property.

The question of state ownership is significant because shareholders may wonder whether Tianhe's chain of ownership is clean.