The China Hustle Movie Script

All they hoped was that this company didn't collapse.

他们只希望这家公司不要倒闭。

Many of these companies would say, "Well, look.

We're being audited by Pricewaterhouse." No, they're not.

They're being audited by Pricewaterhouse China, which is like a franchise.

It's not really Pricewaterhouse.

In the United States, whenever we've had a massive fraud-- that we've been short people always ask me, "Well, who were the auditors?" And I always say, "Who cares?" It's important to understand, and most people don't know this, that the financial statements are prepared by management, not by the auditors.

Auditor's job is to simply review management's work.

And if management is trying to hide something or has co-opted the auditors, they will hide it.

If hiding it doesn't work, they opt for plan B.

hire a good lawyer.

Orient Paper brought in Mitch Nussbaum of Loeb & Loeb to respond to Muddy Waters' allegations.

Mitch had helped bring dozens of Chinese companies to market, and he knew how to fight back.

You have short sellers who-- who go ahead and put a short position on the company and then throw all sorts of allegations against them... Nussbaum's firm led an investigation.

His unsurprising conclusion was that Carson's allegations were false and that his report amounted to slander.

How-- do I know what anybody's telling me is true?

- That's a huge problem.

- It's a huge problem.

All right, Let's talk about a case where you did a type of forensic investigation-- - um hmm.

- Orient Paper.

I wouldn't be prepared in these circumstances to discuss or present any more or additional information than what we disclosed publicly, because that wouldn't be, you know, appropriate.

The Chinese businesses were a huge profit center for Loeb & Loeb, but I imagined that the company's often-shoddy paperwork posed a problem for Nussbaum and his colleagues.

I wondered how just how much diligence they had to do to satisfy regulators.

Forget about the lawyer.

Forget about the banker.

The banker doesn't go into the books and records of the company.