Here’s Why Alibaba’s Accounting Is As Alarming As Enron’s by Stephen Gandel @FortuneMagazine May 12, 2016, 10:52 PM EDT E-mail Tweet Facebook Linkedin Share icons Jim Chanos, the hedge fund manager who was one of the first to detect problems at Enron, says the accounting at Alibaba Group is as problematic as the now-defunct, corrupt energy company. Chanos specializes in short selling, or betting that certain stocks will go down. Chanos says that Alibaba baba , like Enron, uses off-balance-sheet entities that make it impossible to know how much money the Chinese e-commerce giant is actually making. “The accounting at Alibaba is some of the most questionable I have ever seen for a major multi-billion market cap company that went public [in the U.S.],” says Chanos, who has said in the past that his fund, Kynikos Associates, is betting against Alibaba’s shares. Chanos made the comments about the Chinese Internet giant on Thursday at the SALT hedge fund conference in Las Vegas. The most problematic aspect of Alibaba’s accounting, Chanos believes, has to do with its delivery operations. He says packaging up orders that people make on the website and getting those packages to the customers’ doors is a core part of Alibaba’s business. Yet Chanos says the operations of that business—notably the costs of doing all those deliveries—are excluded from the earnings that Alibaba reports to its American shareholders. That’s because Alibaba’s delivery operations are part of an unconsolidated separate entity that the internet commerce giant does not include in its financial statements. The result Chanos says is that much of the company’s cashflow gets sucked up by these affiliated businesses. “What the company is really earning we don’t know,” says Chanos. “My experience with Chinese companies is that what you don’t know is generally not good news.” Chanos is one of several investors who have raised red flags about Alibaba and its accounting. Back in September, John Hempton, who runs Australian hedge fund Bronte Capital, said Alibaba’s numbers looked like they had been faked. In the past Alibaba has said that it “stands by our reported financials and operating metrics.” The company could not be reach for comment. Chanos says that if investors were able to see Alibaba’s complete financials they would see that the company’s returns on capital are plunging. “What I like to remind people is that Alibaba was a thief,” he says.