Unraveling a Multibillion-Dollar Aluminum Fraud

When Muddy Waters published pseudonymously on China Zhongwang in 2015, MW claimed the fraud was one of the most complex and global schemes that short-sellers have ever uncovered. With the recent convictions in U.S. federal court and the suspension of Zhongwang’s stock in Hong Kong, the story of this multibillion-dollar alleged aluminum fraud is finally coming to a close. Zhongwang first came under scrutiny shortly after its IPO in 2009. But in 2014, a journalist and short-sellers noticed a mysterious multi-billion dollar stockpile of aluminum in the Mexican desert. This discovery led Muddy Waters to uncover complex webs of related party transactions, secretly controlled companies stretching from China to California, and alleged multi-billion dollar frauds on Chinese banks, Hong Kong investors, and the U.S. government. This is the story of that investigation and the painful aftermath for the team at Muddy Waters, who after six years, has finally been vindicated.