What's wrong with me being a rich man?

Chapter 552 Respect
On April 17, 2015, Guoshanfeng had been silent for half a year.

Will the king of short sellers reappear?

This is a retrospective report published by The Wall Street Journal on April 13. It's not that people suddenly miss the peak, but rather that Volkswagen reached a plea agreement with the U.S. Department of Justice on April 12, admitting to three felonies: conspiracy to commit fraud, obstruction of justice, and making false statements, and agreeing to pay a $25 billion criminal fine.

This amount represents the highest criminal fine ever levied against an automaker in U.S. history.

At the same time, Volkswagen paid $14 billion in civil penalties to the U.S. Environmental Protection Agency (EPA) and Customs and Border Protection (CBP), including $1 million to compensate for customs fraud, and $6 million to 44 U.S. states and Washington, D.C. for environmental remediation and public health projects.

The combined criminal and civil fines amount to a staggering $45 billion.

However, this is only what can be confirmed at present. The real amount is yet to be determined. Volkswagen needs to compensate American car owners who purchased its diesel models and must repurchase or repair nearly 45 diesel cars, including models such as Jetta, Golf, and Passat.

The funding required for this portion has not yet been agreed upon, but it is expected to be close to tens of billions of US dollars.

Finally, Volkswagen was also required to set aside billions of dollars to establish an environmental trust fund for projects aimed at reducing nitrogen oxide emissions.

All of these factors mean that Volkswagen's direct expenses in the United States could exceed $200 billion, and according to Goldman Sachs' estimates, indirect losses worldwide could exceed $400 billion.

This huge expenditure is only Volkswagen's compensation for the diesel emissions scandal. The market monopoly issues involving Mercedes-Benz and BMW are still under investigation, but another huge fine is inevitable.

However, this expenditure is already the punishment after Volkswagen pleaded guilty. According to the U.S. Clean Air Act, each offending vehicle can be fined up to $3.75. Theoretically, the maximum fine for the nearly 45 vehicles involved in this Volkswagen case could reach $168 billion.

According to The New York Times, Volkswagen executives were even mocked when they pleaded guilty at the Justice Department.

Washington law enforcement officials shook hands with Volkswagen executives to celebrate the end of the plea proceedings, jokingly saying, "Thanks, Peak."

The Volkswagen executive seemed to be directly shocked and fainted.

The fraud and monopoly practices of traditional gasoline-powered car manufacturers, which were exposed in large numbers last year, have been used as negative examples by many universities and institutions, and Volkswagen is a prime example in this case.

Meanwhile, this incident, which was not only named by the media but also entered textbooks in universities and institutions as the "Mountain Peak Incident," is still being studied by the organization that derives its name from somewhere in the world, observing global listed companies.

Thank you, Guo Shanfeng.

However, it remains to be seen when the mountain peak will reappear. Regulatory agencies have not given up the search, and in particular, a joint investigation team from several European countries is continuing to follow up on the mountain peak's funding chain and is working to promote the exchange and transparency of financial information globally.

At this moment, the ghost suddenly reappeared.

At 10 p.m. China time (10 a.m. New York time), Guoshanfeng released a slightly different short-selling report, explaining its pessimism about Toshiba by pointing to financial problems in multiple business units, management's performance targets, and anomalies in financial data.

This is the longest short-selling report released by Guoshanfeng since his debut.

Moreover, the conclusion is pessimistic, and the judgment is skeptical.

Compared to previous reports that used solid data to short automakers like Volkswagen and Renault, this report is more akin to the style of a third-party research institution.

This short-selling report is a public questioning, not a public confirmation.

At least, that's what Li Song and Xu Xin thought, as they carefully studied their predecessors' operations late at night.

"Toshiba recognized revenue ahead of schedule for the Hinkley Point nuclear power plant project in the UK, but the actual construction progress was seriously delayed, and the project faced huge losses due to technical problems and cost overruns. This is a whitewashing of Toshiba's 2014 financial report."

Li Song picked out the details in the short-selling report and studied them repeatedly before asking, "Is Guoshanfeng really that sophisticated? Do you have any friends who understand this? Let's ask them too, is this true?" Xu Xin remained calm: "I believe Guoshanfeng. Since they released it, they must have confirmed it repeatedly."

She then pointed to the report on the tablet: "These are actually accusing Toshiba of financial fraud."

It's not just large-scale projects like Toshiba's nuclear power plants; Guo Shanfeng also disclosed that Toshiba's personal computer and television businesses also recognized revenue in advance through methods such as "accounts receivable factoring," and what was posted was that suppliers were postponing the issuance of invoices to the next quarter on a large scale.

Not just one supplier, but a large-scale supplier.

It's not just one business unit that's manipulating financial data; it's every business unit, from the largest to the smallest, doing the same thing.

Meanwhile, the short-selling report by Guoshanfeng also pointed out Toshiba's failure in the semiconductor field. The demand in the global semiconductor market has fluctuated sharply in the past period. While similar companies have made full provisions for impairment in accordance with accounting standards, Toshiba's financial statements only made impairment for finished products, without adjusting "work in progress" and "raw materials". It is reasonable to estimate that the inflated operating profit in this regard may exceed 300 billion yen.

As for criticisms of Toshiba's management, Toshiba's nuclear power business has been severely damaged since the Fukushima nuclear accident in 2011, but management has still demanded that the division maintain high profits in various public occasions, which is clearly unreasonable.

It's not just Guoshanfeng who thinks it's unreasonable; Toshiba's stock price has already fallen from 500 yen to 410 yen last month, and the market is clearly worried about the authenticity of its financial reports. Looking at Toshiba's 2014 financial report, its operating cash flow was only 6% of its profit, significantly lower than the industry average, raising questions about the quality of its profits.

Xu Xin read through Guo Shanfeng's short-selling report twice more and couldn't help but praise it, saying, "After reading the whole thing, one can't help but question Toshiba. A lot of the data Guo Shanfeng used this time came from Japanese media themselves."

Toshiba's stock price had already been falling since its earnings report was released last month, prompting considerable questions from the media.

"One small question mark, two small question marks, three small question marks, question marks everywhere, combined they form a big question mark." Li Song browsed through the key points, "Guoshanfeng has put a lot of effort into Toshiba."

He suddenly shook his head: "No, something's not right this time. In the past, it was always something very certain. This time... it must have inside information, but the report is based on public and semi-public information!"

Xu Xin scoffed: "Are you afraid of being accused of insider trading when you're crossing a mountain peak?"

She understood her husband's meaning. The way he reported the mountain peak was to avoid violating insider trading rules, but the king of short sellers was already embroiled in trouble and investigations. If he could effectively defeat Toshiba, why bother with secrecy?

The more fascinated Li Song became with his "real research," the more firmly he believed in the King of Short Sellers. He shook his head and said, "Crossing the mountain peak is different; it's different."

Xu Xin still smiled: "What's the difference? The king of short sellers is still a short seller, and he's still profit-driven."

Li Song thought for a moment and then used examples from his own life to support his feelings: "It's like how your Capital Today only invested in Yu Xing's new energy project. So many projects have emerged in the past two years, why haven't you invested in them? It's because Yu Xing is different."

Xu Xin pondered for a moment: "Yu Xing is indeed different, but this cannot be generalized."

The two wanted to discuss the style of the mountain peak, and a new news from Tokyo had already appeared on the screen.

At 11:30 p.m. in Tokyo, half an hour after the peak appeared, Japan's Financial Services Agency issued the latest regulatory measures discussed in an emergency meeting. The measures temporarily revised the short selling regulatory rules, increased the margin ratio for short selling, and required daily disclosure of short positions exceeding 0.2% of the outstanding shares.

The short-selling report was released late at night, nine and a half hours before the Japanese stock market opened. Toshiba, the company involved, has yet to respond, whether it has refuted or admitted the allegations.

However, regardless of Toshiba's actions, the Japanese Financial Services Agency changed its stance to "respect," fully expressing its respect for the king of short sellers.

Overshoot is an old acquaintance, having worked for Mitsubishi, Takata, Toray, and Kobe Steel. He is known as the "Sales Demon King" by the Japanese media, a figure both praised and hated.

This time, before Toshiba even acknowledged it, the Japanese Financial Services Agency acted as if to show respect!

(End of this chapter)