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Clear Channel Outdoor says China probe may lead to criminal, civil sanctions.

As previously disclosed, several employees of Clear Media Limited, an indirect, non-wholly-owned subsidiary of Clear Channel Outdoor whose ordinary shares are listed, but are currently suspended from trading on, the Hong Kong Stock Exchange, are subject to an ongoing police investigation in China for misappropriation of funds. Such misappropriation resulted in discrepancies between actual cash balances and cash amounts included in the company's accounting records. Included in Selling, general and administrative expenses and Interest expense is $9.6 million and $1.4 million, respectively, recorded in the fourth quarter of 2017 to correct for the accounting errors resulting from the discrepancies. Such corrections are not considered to be material to the current year or prior year financial statements. Clear Media Limited has conducted additional procedures and processes, including a special investigation by forensic accountants and an external law firm appointed by Clear Media Limited's board of directors and approved by the CCOH's Audit Committee, into the misappropriation of funds. During the course of the special investigation, it was discovered that three bank accounts were opened in the name of Clear Media Limited entities, which were not authorized, and certain transactions were recorded therein. These matters have been referred to the police in China for investigation. The company advised both the United States Securities and Exchange Commission and the United States Department of Justice of the investigation at Clear Media Limited, and the company intends to cooperate with both agencies in connection with any investigation that may be conducted in this matter. In 2017, Clear Media Limited accounted for 9.8% of the company's net revenue and 9.9% of its consolidated total assets. Based on information known to date, the company believes any contingent liabilities arising from potential misconduct that has been or may be identified by the investigations are not material to the consolidated financial statements of the company. The investigation could implicate the books and records, internal controls and anti-bribery provisions of the U.S. Foreign Corrupt Practices Act, which statute and regulations provide for potential monetary penalties as well as criminal and civil sanctions. It is possible that monetary penalties and other sanctions could be assessed on the company in connection with this matter. The nature and amount of any monetary penalty or other sanctions cannot reasonably be estimated at this time.

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Publication:The Fly
Geographic Code:9CHIN
Date:Apr 30, 2018
Words:385
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