Recently, Evergrande Real Estate and its founder Xu Jiayin have been officially announced by the Communist Party of China’s official organization to have been fined 4.1 billion yuan (RMB, below) and 47 million yuan respectively for bond fraud and false reporting in annual reports.
On May 31st, the topic “Xu Jiayin fined 47 million, Evergrande Real Estate fined 4.1 billion” trended on mainland social media platforms. The announcement on May 31st from the China Securities Regulatory Commission (CSRC) revealed that the CSRC recently made penalty decisions on Evergrande Real Estate’s bond fraud and violations in information disclosure, imposing the maximum fines. Evergrande Real Estate was ordered to rectify, warned, and fined 41.75 billion yuan; Xu Jiayin, the former chairman and actual controlling shareholder of Evergrande Real Estate, was fined 47 million yuan and subjected to a lifelong ban from the securities market.
The CSRC stated that from 2019 to 2020, Evergrande Real Estate inflated revenue and profits by recognizing income in advance, leading to fraudulent issuance of bonds in the exchange market and false reporting in related annual reports. Additionally, Evergrande Real Estate failed to disclose regular reports on time, disclose significant litigation and arbitration as required, and disclose the failure to repay maturing debts as required.
In addition to Evergrande and Xu Jiayin, the fined individuals include the former CFO of China Evergrande Group Pan Darong (9 million yuan), former Vice President and General Manager of Finance Center of Evergrande Real Estate Pan Hanling (7.5 million yuan), former President of Evergrande Real Estate Zhen Lita (2 million yuan), and former President and CEO of Evergrande Real Estate Ke Peng (2.8 million yuan).
The announcement also mentioned that due to the inability to contact Xia Haijun, the former Vice Chairman and President of China Evergrande Group, separate measures will be taken against him.
Since Xu Jiayin was arrested in September last year, various high-ranking executives of Evergrande, such as Pan Darong and Ke Peng, have been taken away one after another, but Xia Haijun remains elusive. The Shenzhen Stock Exchange also stated that they were unable to contact Xia Haijun.
In March of this year, Evergrande Real Estate announced that they had received advance notice of administrative penalties and market bans from the CSRC.
The announcement stated that Xu Jiayin, Xia Haijun, and others made decisions and organized the implementation of financial fraud, and both were required to be banned from the securities market for life. Evergrande Real Estate was fined 41.75 billion yuan, and Xu Jiayin was fined 47 million yuan. Evergrande Real Estate stated that they waive the right to make statements, defend, and hold hearings regarding this penalty.
On the day of the heavy fines, Xu Jiayin was restricted from high consumption activities.
On the evening of September 28 last year, Evergrande announced that Xu Jiayin had been arrested. A source familiar with the matter told the Daily Economic News that before Xu Jiayin’s coercive measures were taken, his second son, Xu Tenghe, had already been taken away.
Evergrande has been suspended since January 29 this year and is currently in the process of liquidation. On May 22, Evergrande Real Estate Group Co., Ltd. added 32 new entries to the list of persons subject to enforcement, with a total execution amount of more than 4.14 billion yuan, involving bill disputes and other cases. Currently, there are over 790 entries of persons subject to enforcement by Evergrande Real Estate Group Co., Ltd., with a total amount executed exceeding 71.6 billion yuan.