Home Business China Accuses Evergrande of Financial Fraud in $78 Billion Case

China Accuses Evergrande of Financial Fraud in $78 Billion Case

China Accuses Evergrande of Financial Fraud in $78 Billion Case

Chinese regulators have revealed that Evergrande, a prominent property developer, and its founder have been accused of inflating revenues by a staggering $78 billion, marking the largest financial fraud case in the country’s history. The China Securities Regulatory Commission imposed a hefty penalty of 4.175 billion yuan ($580 million) on Hengda Real Estate, Evergrande’s main unit in China. Additionally, the founder and chairman of Evergrande Group, Xu Jiayin, was fined 47 million yuan ($6.5 million) and barred from the securities markets for life due to the alleged overstatement and other violations.

After an eight-month investigation by the CSRC, it was uncovered that Evergrande had inflated its sales figures in financial reports, leading to the fabrication of 214 billion yuan ($30 billion) in 2019 sales and 350 billion yuan ($48.6 billion) in 2020 sales. This fraudulent activity inflated the company’s net profit by 63% in 2019 and 87% in 2020. The outcome of the investigation resulted in penalties being imposed on the company and its key executives, with six other top-level executives facing fines for being directly responsible for the financial misconduct.

The repercussions of this massive financial fraud case extend to lifelong bans from the securities markets for Xu Jiayin and another top executive, Xia Haijun. The severity of the fraud was emphasized by the regulator, highlighting the grave circumstances and condemning the actions of the accused individuals. This scandal has not only tarnished Evergrande’s reputation but also shed light on the need for tighter regulations and oversight in China’s securities markets to prevent future instances of such significant financial misconduct.

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