Chinese regulator accuses Evergrande of $78 billion fraud – Kommersant

China’s Securities Regulatory Commission (CSRC) has accused bankrupt property developer Evergrande of deliberately and systematically inflating revenue figures, reports Bloomberg.

Based on the results of the audit, the regulator concluded that China Evergrande Group overstated real estate sales figures in 2019 and 2020. In 2019, the developer overstated the revenue figure in its financial statements by 213.99 billion yuan. In 2020, sales were inflated by 350 billion yuan. In total, the company defrauded investors of 564 billion yuan ($78 billion), one of the largest frauds in Chinese history.

For falsifying financial statements and deceiving investors, the company’s founder, Xu Jiayin, was fined 47 million yuan ($6.53 million). In addition, he is barred from accessing the securities market for life. Evergrande was fined 4.175 billion yuan ($580 million).

The crisis around Evergrande began in the fall of 2021, when it became known about the holding’s serious financial problems. The debts of one of China’s largest developers exceed $300 billion. In June 2022, the Hong Kong investment firm Top Shine filed a lawsuit for the forced liquidation of Evergrande, since the developer violated the terms of the agreement between the two companies by not buying back the shares of one of its divisions, Fangchebao. Other Evergrande creditors later joined the lawsuit. At the end of September, it became known that the founder and chairman of the board of directors of the group, Xu Jiayin, was detained by the police and is under investigation. Finally, in January of this year, after numerous postponements of hearings, the Hong Kong court decided to compulsorily liquidation Evergrande.

Kirill Sarkhanyants