Darkstone Code
Chapter 138 - 0137 Unexpected, right? I didn’t see it coming either.

Chapter 138: 0137 Unexpected, right? I didn’t see it coming either.

Falsifying financial reports, once a publicly traded company faces such accusations, even if a moment before it was the market’s adored "gold stock," it only takes a second for it to become a "penny stock."

Penny stock, worthless shares, the market’s understanding of a company’s business situation mainly comes from the financial reports it publishes each cycle.

These reports contain detailed operational conditions and conclude with an accurate summary of how much profit or loss they made, their assets, and the effectiveness of their operations, among other details...

Outsiders, or even insiders of a company, may not have a full understanding of it. Combined with the fact that this is a society that values honesty, people are inclined to believe that these publicly traded companies would not engage in the malicious act of data manipulation, so few question the accuracy of a company’s financial data.

In truth, they lack the means to question it, even if something feels off, they have no way or opportunity to unravel the mystery.

But it must be said, for a public company, financial fraud is akin to standing at the edge of an active volcano; even if it doesn’t fall to death, it will surely get burned.

After Neo spoke, the telephone receiver instantly erupted with noise, he could tell that these people were not in good states, but he was indifferent. He and his father-in-law were no longer the largest shareholders of the company.

Indeed, if something goes wrong, the two of them wouldn’t be able to get away, but neither would the other shareholders. They too would face bankruptcy, which is why Neo was convinced that even if he spoke out, these people wouldn’t report him.

"Neo, Alben, this is a crime!"

"I am going to report you!"

The phone quickly erupted into emotional outbursts from the largest shareholder of the Ristone Group’s board, his voice trembling in addition to being hoarse.

Neo was very calm, replying in a slightly playful tone, "You can hang up now and dial a number to report my falsification of financial reports."

"I believe the Federal Financial Crimes Investigation Bureau, the Tax Bureau, and the media will be very interested in your report!"

The Federal Financial Crimes Investigation Bureau is a branch operating independently under the FBI, targeting all financial crimes for investigation and crackdown.

Neo’s words surprisingly silenced the largest shareholder for four to five seconds, immediately evoking comforting words from other board members, afraid that if this person really did something rash, they would all face ruin because of him.

After a brief pacification, the major shareholder had only one request, "You must explain the purpose of your actions. If you can’t convince me, I will report your illegal activities immediately..."

This statement sounded very fierce, but in fact, it was a threatening bluff, and Neo certainly knew how to play along.

"Of course, sir, that’s exactly what I want to discuss with everyone because it concerns our upcoming measures."

"Actually, Ristone’s profits started to shrink rapidly three years ago, and about two years ago, it experienced its first loss..."

Simply put, it was then that President Neo discovered some issues within Ristone: the cash flow slowed, inventory piled up, and with less money in people’s hands, consumer power began to erode, leading this multi-brand conglomerate to face the same problems as small businesses.

Neo, along with Alben and his trusted personnel, believed this was not a simple phenomenon, and at their behest, the finance department altered the financial report for the first time, turning losses into continuous profits, even showcasing growth points.

The decision quickly yielded the desired results, with Ristone Group’s stock price continuing to rise, making the losses seem inconsequential.

In his own words, the drastic increase in overall corporate market value driven by rising stock prices in the annual summary report was enough to cover operational losses.

This was poison; in the face of continuous operational losses, utilizing soaring stock prices to cover poor management looked beneficial, but it was all based on falsified data.

Today, two years of financial fraud could bring down Ristone in an instant. Neo didn’t hide anything, telling all the shareholders with relatively cold and harsh words that he and his father-in-law Alben had already liquidated about half of their shares.

In other words, the shares they currently hold are no longer sufficient to control their position.

Facing the anger and curses of the shareholders, Neo and Alben were indifferent, even slightly smug.

Of course, there are many criminal acts in this situation, which is why Neo and Alben still hold the positions of board chairman and group president; they aim to clear themselves of accusations, making sure their illegal actions are not prosecuted.

"From the current information I have, Ristone is already on very precarious ground, which is why I’ve been forcefully pressing Landon..."

Landon is the mayor of Sabin City.

Neo sat on the study chair, holding a high-end cigar in one hand and the phone in the other, his eyes wandering, as if the smoke from the cigar obscured his vision, making him unable to see what’s in front, or his gaze pierced through reality and into the void.

"Only by acquiring Henghui’s most important core resources can Ristone quickly transform and grasp a lifeline."

"Originally, we had reached halfway in our secret talks with Henghui, but the Federal Tax Bureau’s sudden investigation put a halt to our plans. Without forcing Landon, we have no chance to pull ourselves out of the mire, but from the looks of it now, we have failed!"

Henghui’s shareholders plan to withdraw their funds to their home country for post-war reconstruction. Those once highly valuable businesses and channels are now merely tools for cash-out.

If it weren’t for the Federal Tax Bureau’s sudden intervention, Ristone might have already acquired the desired piece.

Unfortunately, everything was ruined.

The phone was eerily calm, with only heavy breathing audible. No one knew that the situation at Ristone had become so dire; after all, externally, the name of the conglomerate alone was a source of pride for many.

In this state, everyone took pride in being an employee of the Ristone Group!

Yet, in Neo’s words, the company was on the verge of bankruptcy. It’s truly hard to imagine.

This can’t strictly be considered a surprise; when Ristone’s sales began to slow, their winter was a certainty.

Thousands of workers, just the monthly payroll came to millions, but their payment and profit turnover became too slow.

On one hand, laying off employees to save costs, and on the other, using financial forgery to raise stock prices, then securing necessary funds through liquidation.

A significant portion of the funds Neo and Alben liquidated was indeed reinvested in the company’s operations, although they did so under third-party names, not out of altruism.

The silence pleased Neo, now everyone essentially rallying to the same cause. He proceeded to share some of his thoughts, "I have been in contact with people from the Conservative Party; they are more accommodating than Landon and concur with my views and ideas on the current industrial structural changes, willing to venture into cooperation with us."

"They’ve offered generous policies, more importantly, providing an opportunity to shrug off the burden."

"We will shed those draining workers and employees, take the wealth, and leave directly, making our previous actions unproblematic."

"Most importantly, I’m asking you to do nothing. On Monday, once the market opens, there will undoubtedly be rumors of severe discord between myself and Landon, and that Ristone is disliked by the Governor."

"When that happens, our stock price will decline swiftly; I urge you to sell a portion of the shares to push the stock price down. Once the authorities intervene, I will publicly announce the initiation of privatization."

"Then... we can gracefully exit here, and I assure you that none of your personal fortunes will suffer a significant shrinkage."

This was a plan that Neo and Alben had deliberated over a long time. Initially, they wanted to secure projects previously negotiated with Henghui, swiftly integrate Henghui’s channels and advantageous sectors, and reactivate these ventures post-merger.

But now, circumstances forbid, so diverging from the norm, they would carry the company’s core away, leaving some troubles locally.

Then, when people speak of Ristone, they wouldn’t say it was some individuals who ran the company out of town. They could even leverage Landon’s and the Governor’s disfavor political narrative to color their departure.

Regarding financial fraud, those who know wouldn’t speak, and those desiring their downfall would remain in the dark.

A very perfect plan, and even if someone brings up these issues in the future, the result would be a mere fine, just a bit of money, possibly nothing happens at all, turning into a classic case of financial maneuvering!

As long as the conglomerate and shareholders don’t pursue his responsibility, he wouldn’t face punishment - post-privatization he only needs to be accountable to the shareholders. As long as they express non-pursuance of his responsibility, he won’t be prosecuted.

Of course, this is all future concerns; their immediate task is to overcome this ordeal!

He thought the Governor’s staff officer was right, only "unity" can help them cross this hurdle, and that’s precisely what he’s doing now, uniting the board members to execute this rapid transformation!

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