Chinese regulators have accused Evergrande, one of China’s largest real estate developers, and its founder Xu Jiayin of inflating revenues by a staggering $78 billion. This revelation has placed Evergrande at the center of China’s biggest ever financial fraud case.
The China Securities Regulatory Commission (CSRC) imposed a penalty of 4.175 billion yuan ($580 million) on Hengda Real Estate, a subsidiary of Evergrande, for its role in the fraud. Founder Xu Jiayin was fined 47 million yuan ($6.5 million) and barred from securities markets for life following an eight-month investigation by the CSRC.
The investigation into Evergrande’s alleged financial misconduct had previously derailed the company’s debt restructuring talks with overseas bondholders. Chinese authorities have also detained Evergrande’s chairman on suspicion of unspecified “crimes.”
Hengda Real Estate, a major subsidiary of Evergrande, has been accused of inflating sales in its financial reports and fabricating a staggering 214 billion yuan ($30 billion) in sales for the year 2019 alone. The alleged fraud amounts to a total of 564.1 billion yuan ($78 billion) over a span of two years.
In addition to founder Xu Jiayin, six other Evergrande executives have been fined for their roles in the scandal and banned from participating in securities markets. Xia Haijun, the former vice chairman and CEO of Evergrande Group, has also been barred for life.
This financial fraud case involving Evergrande is considered the largest ever in mainland China’s securities markets and has sent shockwaves through the country’s real estate and financial sectors. As the investigation continues, the future of Evergrande and its implicated executives remains uncertain.
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