China's Dynasty Fine Wines accused of faking sales

Chinese wine giant Dynasty Fine Wines has for the first time described allegations made against it, including faking sales and trying to sell sour wine to customers, as an investigation continues.

Dynasty has been accused of falsely recording hundreds of millions of yuan of wine sales, said the company in a Hong Kong stock exchange listing. It has also been accused of selling wine from its warehouses that was 'not fit for sale'.

It is the first time that Dynasty has detailed the allegations made against the company, which prompted it to suspend share trading on 22 March 2013 and launch a formal investigation.

The firm made no comment on whether the accusations were true or false, and said investigations were ongoing.

The allegations were sent anonymously to Dynasty's auditor, PwC, said the firm, which is part owned by French wine and Cognac group Remy Cointreau.

One of the accusations was that Dynasty recorded RMB430m of false sales in 2010, said the company's filing.

It was also alleged that customers returned 2.3m cases of wine to Dynasty, because of quality problems. The 'deteriorated' wine was stored in hot and humid conditions at the company's Jiangsu Taicang and Fujian Zhangzhou warehouses in 2010, but most of it was subsequently re-located, according to Dynasty's account of the allegation.

Dynasty added, 'Shareholders and investors are advised not to draw any conclusions in relation to matters which are subject to further investigation until the investigation has progressed further and an announcement containing conclusions on these matters is published.'

Last year, Dynasty said it was cutting distribution costs in order to improve profits.