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Perfect World Announces Findings Of Internal Investigation

Stocks in this article: PWRD

BEIJING, May 11, 2012 /PRNewswire-Asia/ -- Perfect World Co., Ltd. (NASDAQ: PWRD) ("Perfect World" or the "Company"), a leading online game developer and operator based in China, today announced the findings of the Audit Committee based on the results of an internal investigation.  On January 10, 2012, Perfect World announced that its independent Audit Committee planned to thoroughly review the anonymous allegations posted on certain Chinese language websites on or around January 8, 2012 (the "Allegations") and would engage independent legal counsel to assist with the review. 

(Logo: http://photos.prnewswire.com/prnh/20090416/CNTH023LOGO )

The Audit Committee engaged the law firm of Greenberg Traurig, LLP ("Greenberg Traurig") to conduct an independent investigation into the Allegations.  In turn, Greenberg Traurig consulted with independent forensic accountants.  Greenberg Traurig had no prior relationship with the Company.  Greenberg Traurig reported its findings directly to the Audit Committee.

Summary of Major Findings The following is a summary of the major findings of the investigation generally keyed to the Allegations:

  • Perfect World did not overpay for Zhizhu advertising services or equity.  While Perfect World's CEO, Mr. Michael Yufeng Chi provided interest free personal loans to shareholders of Beijing Zhizhu Network Technology Co., Ltd. ("Zhizhu") to assist Zhizhu between 2008 and 2010, which caused Zhizhu to be a related party to Perfect World prior to Perfect World's investment in Zhizhu, the Audit Committee did not find any evidence to suggest that Perfect World overpaid for any services provided by Zhizhu or Perfect World's investment in 20% of the equity interest in Zhizhu. 

  • No evidence suggests any member of Mr. Chi's family received any monetary benefit, improper or otherwise, from Perfect World's office building renovation project.  The Audit Committee did not uncover any evidence that Mr. Chi's family was connected to the contractors retained by Perfect World for the office building renovation project.  Additionally, the contractor vetting process by Perfect World was reasonable, including evaluations by independent third parties. 
  • The divestiture of the film and television business was properly conducted and the price was reasonable and fair.  Mr. Chi provided proper disclosure of his intentions to acquire the film and television business and conducted himself in accordance with the requirements by the special committee consisted of independent members of the Company's board of directors for purposes of reviewing and approving the divestiture of the film and television business.  The sale price was determined in a fair and reasonable manner, including a valuation and a fairness opinion by a reputable third-party expert.     

  • No evidence suggests that Mr. Chi improperly evaded taxes.  Based on a review of Mr. Chi's tax returns and bank account statements, the Audit Committee has determined that Mr. Chi disclosed the past sales of Perfect World shares and paid taxes thereon. 




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