34.1 million yuan in preliminary fines! Sante Cable's over 4 billion yuan flow to the Contemporary Group, with the audit firm issuing a standard opinion.

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After ST Renfu and Tefeng Securities, the investigation into Sanite Tireway (三特索道) over non-operating fund occupation by its former related party, Contemporary Group, has also produced results. The company and the responsible individuals are jointly expected to be fined a total of 34.10 million yuan. Although the company’s two-period annual reports of Sanite Tireway contain major omissions, both received standard unqualified audit opinions.

Source: Sightseeing City Photo

More than 34.1M yuan flowed to the Contemporary Group system, yet it was not disclosed in time; a fine of 341.0 million yuan is coming

On March 30, 2026, Sanite Tireway (002159.SZ) released an announcement stating that the company and relevant responsible parties, including its former actual controller Ai Luming, have received a notice of prior administrative penalty (《Administrative Penalty Advance Notice》) issued by the Hubei Securities Regulatory Bureau.

This enforcement action is related to the “Contemporary Group system.” In 2013, Wuhan Contemporary Technology Industrial Group Co., Ltd. (hereinafter referred to as: Contemporary Group) became Sanite Tireway’s controlling shareholder. Ai Luming, the “Contemporary Group system” leader, became Sanite Tireway’s actual controller. In August 2019, Contemporary Group transferred 20.09% of its equity in Sanite Tireway to its wholly owned subsidiary Wuhan Contemporary City Construction Development Co., Ltd. (hereinafter referred to as: Contemporary City Construction Development). After that, the controlling shareholder of Sanite Tireway changed to Contemporary City Construction Development, and Contemporary Group remained an indirect controlling shareholder until June 2023.

After investigation by the Hubei Securities Regulatory Bureau, since 2019, due to Contemporary Group’s funding needs, Sanite Tireway has remitted funds into the collection entities designated by Contemporary Group, and ultimately the funds were transferred to Contemporary Group, its related parties, and counterparties, forming non-operating fund occupation by related parties.

In 2019, non-operating fund occupation occurred between Sanite Tireway and Contemporary Group totaling 1.79B yuan; in 2020 it was 370 million yuan. These amounts respectively accounted for 133.49% and 25.59% of the net assets recorded in Sanite Tireway’s 2019 and 2020 annual reports. By the end of each year, the outstanding occupied balances were both 0 yuan.

Under applicable requirements, Sanite Tireway should disclose in its annual reports related-party transactions and matters regarding non-operating fund occupation by related parties. However, the company’s 2019 and 2020 annual reports failed to disclose the above matters, constituting major omissions.

From August to December 2020, and in 2021 and January 2022, Sanite Tireway failed to disclose in a timely manner the amounts of funds transferred out to Contemporary Group: 340 million yuan, 30B yuan, and 500 million yuan, respectively. These amounts respectively accounted for 31.89%, 131.67%, and 34.58% of the company’s most recent audited net assets.

Based on the above transfer amounts, from 2019 to 2022, Sanite Tireway’s non-operating fund occupation by Contemporary Group totaled more than 4 billion yuan in transfer amounts.

In April 2022, the Shenzhen Stock Exchange issued a letter of inquiry to Sanite Tireway, requiring the company to disclose the specific reasons and the use of funds for the cumulative pledge of 97.16% of Sanite Tireway shares held by Contemporary City Construction Development and its persons acting in concert, and to comprehensively self-check whether the company had any violations such as fund occupation, illegal guarantees, or related-party transactions that were not reviewed or not disclosed.

At the end of April, Sanite Tireway replied that the high-percentage pledge was a measure taken by Contemporary Group to address its occupation of the company’s funds. In that reply, Sanite Tireway first disclosed the aforementioned non-operating fund occupation situation from 2019 to 2022.

At the same time, Sanite Tireway stated that as of April 2022, Contemporary Group had repaid all occupied funds to the company in full cash form, together with the interest during the occupation period, and that the situation of fund occupation by the controlling shareholder’s related parties had been eliminated.

For the above-mentioned violations, the Hubei Securities Regulatory Bureau is planning to decide to fine Sanite Tireway 10.50 million yuan.

The Hubei Securities Regulatory Bureau believes that from 2020 to 2022, Ai Luming, the then actual controller of Sanite Tireway, repeatedly required the company to provide funding support to Contemporary Group, which may constitute the actual controller’s “instigation” to commit information disclosure violations as stipulated in the Securities Law. The Hubei Securities Regulatory Bureau plans to decide to impose a fine of 11.00 million yuan on Ai Luming and take a lifelong ban from the securities market.

Sanite Tireway’s then chairman Lu Sheng, then general manager Zhang Quan, and Wang Liyi, and then chief financial officer Zhang Yunying are also facing fines ranging from 2.50 million yuan to 4.50 million yuan. The total amount of this proposed preliminary penalty is 34.10 million yuan.

A total of 1.42B yuan of fund occupation was omitted; both annual reports received standard audit opinions

Previously, ST Renfu (600079.SH) and Tefeng Securities (601162.SH) had already been punished for having funds illegally occupied by Contemporary Group.

We previously published articles 《Hundreds of billions of yuan flowing to related parties, a 30-billion yuan leading company marked ST, and the audit institution issuing an unqualified opinion with an emphasis paragraph》《More than 2 billion yuan flowing to Contemporary Group; Tefeng Securities was filed along with it, and the audit institution issued a standard opinion》covering the relevant matters, and pointed out that the periodic reports of the two companies during the period involved received unqualified audit reports with an emphasis paragraph from the annual audit institutions, and even standard unqualified audit reports.

Sanite Tireway’s 2019 and 2020 annual reports did not disclose non-operating fund occupation of 950k yuan and 370 million yuan, respectively, constituting major omissions. However, the annual audit institution, Zhongshen Zhonghuan Certified Public Accountants (LLP) (hereinafter referred to as: Zhongshen Zhonghuan), also issued standard unqualified audit reports.

Among them, the signed certified public accountant for Sanite Tireway’s 2019 audit report was Yang Hongqing and Wang Tao; the signed certified public accountant for the 2020 audit report was Yang Hongqing and Wu Yumei.

In 2021, the Shenzhen Stock Exchange previously issued a letter of inquiry on the 2020 annual report to Sanite Tireway. Because at the end of 2020, both the company’s monetary funds balance and its interest-bearing liabilities balance were relatively high, and because the company’s interest expense in 2020 was far higher than its interest income, the Shenzhen Stock Exchange required the company to conduct a self-check to see whether there were non-operating funds occupation by the controlling shareholder and related parties, whether the presentation of relevant monetary funds was true and accurate, and required the annual audit accountants to explain in detail the audit procedures performed regarding the monetary funds, the audit evidence obtained, and to provide a clear opinion on the above matters.

In June 2021, Sanite Tireway replied that as of the end of the reporting period, the balance of non-operating fund occupation by the company’s controlling shareholder and related parties was 0, and that the presentation of the relevant monetary funds was true and accurate. The company did not mention the issue of Contemporary Group’s fund occupation during the year.

The annual audit accountants stated that the company’s explanation of the matter is consistent with the actual situation, and that there were no rights restrictions at the end of the period such as pledges, freezes, etc. for the monetary funds; the balance of monetary funds at the end of the period was true and accurate. The annual audit accountants did not express an opinion on the fund occupation issue.

In May 2022, after Sanite Tireway disclosed Contemporary Group’s fund occupation issue, the Shenzhen Stock Exchange issued another letter of inquiry to the company, requiring the annual audit accountants to explain whether the “Internal Control Verification Report” for the period involved issued by them was comprehensive, objective, and prudent.

The annual audit accountants said that in 2019, Contemporary Group occupied Sanite Tireway’s funds through a method involving transfers during the quarter and repayment at the end of the quarter. When recording receipts and payments, the company did not account for the funds according to the actual users of the funds. Due to inherent limitations of internal control evaluation work itself, the annual audit accountants were unable to detect the inconsistency in the fund handling described above.

After that, Zhongshen Zhonghuan issued unqualified audit reports with an emphasis paragraph for Sanite Tireway’s annual reports from 2021 to 2024. The emphasis paragraphs were all related to Contemporary Group’s large-scale fund occupation or a filing-and-investigation by the securities regulator. As of the 2024 annual report, Zhongshen Zhonghuan has provided audit services to Sanite Tireway for 34 consecutive years.

In 2025, Sanite Tireway changed its auditor and hired Zhongqin Wanxin Certified Public Accountants (LLP) (hereinafter referred to as: Zhongqin Wanxin) as the company’s 2025 annual audit institution.

The announcement shows that Sanite Tireway plans to appoint Ye Zhonghui as the engagement partner and the signed certified public accountant, Wu Ping as the signed certified public accountant, and Wang Yongxin as the project quality control reviewer.

In December 2019, because Zhongqin Wanxin, Ye Zhonghui, and other signed certified public accountants failed to exercise due diligence while providing audit services for the 2011 and 2012 annual reports of China Three Gorges New Materials (600293.SH), resulting in reports with false record entries, the Hubei Securities Regulatory Bureau decided to confiscate audit business revenue of 950k yuan from Zhongqin Wanxin and impose a fine of 950k yuan; it also issued warnings to Ye Zhonghui and others, and imposed fines of 50k yuan on each.

Wang Yongxin previously issued a standard unqualified audit report for the 2018 annual report of ST Jingji (000821.SZ).

Upon investigation, in 2018 ST Jingji overstated total profit by 46.7046 million yuan, accounting for 25.49% of the company’s total profit disclosed for the current period, and the annual report contained false record entries. Previously, we published the article 《A million-level fine! This company was marked ST, yet its false annual report still received a standard audit opinion》to cover the relevant matters.

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