On the top floor of S-Meg Tower, in the throbbing core of Asia’s leading international business hub, the Big Boss approves the near-final drafts of the company’s 2009 financial statement and management analysis, which will be released to shareholders and commentators in less than two weeks. Six of us sit at the special feng-shui triangular table in the conference room, watched over by the conglomerate’s late founder peering from his iron lung in the dark-framed, black-and-white photograph hanging from the wall. His son, our visionary chairman and chief executive, fiddles nervously with the ceramic three-legged toad that faces north to bring in extra revenue. The draft annual report is fine by him – it shows a vibrant, keenly managed, highly professional group making a healthy profit and boldly exploring innovative new activities and markets bursting with potential, opportunity and, basically, tons of dough. But will the auditors buy it?
There is a knock at the door, and two tall men in expensive suits, a graying middle-aged Westerner and a younger Chinese, enter, dragging a bruised, bleeding and bedraggled spotty accountant. They fling him to the floor and, without being invited, sit down directly opposite the silent and petrified Big Boss. The elder auditor, Brian, moves some glasses of tea to one side and spreads a sheaf of papers on the table. He looks at them for a minute and sighs. “Right,” he says, taking his spectacles off and looking at S-Meg Holdings’ senior management team one by one. “Well, I thing it’s fair to say that there have been some… issues.” His sidekick smugly glances at the crumpled head bean-counter whimpering on the faded carpet. “But I think we’ve sorted them out… satisfactorily.”
The problem seems to have been something to do with deferred tax assets. It is all over my head. I gave up trying to understand accounting many years ago when I found that unrealized, year-on-year gains or falls on our investment division’s equities portfolio went straight to the bottom line as part of the group’s profit or loss. Common sense, at least for private individuals, dictates that although the shares have a current market value, you haven’t gained or lost a penny until you sell them. It’s voodoo.
Albert the deputy auditor has some questions about the treatment in the Chairman’s letter to shareholders given to one of S-Meg’s most recent, and possibly shameful, projects – a (I can hardly bring myself to type this out) mainland property development. The company has taken a minority stake, with a local partner owned by some county officials, in a gated community of luxury villas rising out of fetid Pearl River Delta paddy fields and crushing the livelihoods of a hundred evicted farmers. Is the site really next to a five-star luxury golf course designed by a world-famous champion hitter of balls with sticks? Is it really just 45 minutes from the border? Is there really a Hong Kong-standard medical centre nearby?
The Big Boss calls on Johnny Mao, the ‘simplified character’ who runs our mainland division, to confirm that this rather heavy-handed marketing blurb infiltrating the corporate report is all correct. It slowly transpires that Albert is actually considering buying one of these houses. “Um, is it a good place for dogs?” he asks. “I need somewhere for our Dalmatians. They’re our children!”
Johnny admits that pets will not be allowed in the development. But, he goes on to explain, there will be special arrangements for people like Albert and his apparently barren wife. It seems that one corner of the subdivision will be named the Pooch Zone. Early every morning, a team of workers will enter the area in a truck and scatter lumps of canine excrement on sidewalks and green areas. There will also be a network of loudspeakers audible to every home, which will broadcast the sound of both yappy and husky barking at random, often lengthy, intervals, 24 hours a day. Last but not least, every resident will be given a free stuffed toy dog with a realistic tongue, which they will be able to rub their shod or bare feet against to get an authentic ‘master’ feeling. This way, Johnny concludes, villa owners will enjoy a suitably ‘doggy’ ambience. Albert seems tempted, but not totally convinced.
And with that – as Ms Lui, the world’s least adequate company secretary, kneels to gently anoint the spotty accountant’s facial wounds with a pack of Nice Day tissues – Brian and the Big Boss shake hands. Another financial year, another ‘true and fair view of the state of S-Meg Holdings’.