By Jiahui Huang
A Chinese regulator has fined a unit of China Evergrande Group almost $580 million for alleged financial misconduct, dealing the former property giant another blow as it navigates liquidation proceedings.
The China Securities Regulatory Commission said Friday that it will fine China Evergrande's flagship onshore unit, Hengda Real Estate, 4.175 billion yuan ($579.5 million) for what it described as fraudulent financial statements and their use in bond issuances.
The CSRC said it had determined that Hengda inflated revenue and profits in 2019 and 2020 by booking revenue in advance. It said the company also failed to meet requirements to disclose periodic reports, information about major litigation and arbitration, and notices of failure to pay debts.
The regulator said it will fine Evergrande founder Hui Ka Yan CNY47 million and ban him from holding executive positions at China-listed companies for life.
The CSRC also said it is pushing forward with investigations into related Hengda intermediaries, without elaborating.
Hengda in March said it received a notice from the regulator informing it of the impending fines. It said then that the CSRC had found it added fake revenue to multiple financial statements and that five bond issuances were suspected of being fraudulently issued. It said it was also informed of another six executives being hit with fines ranging from CNY200,000 to CNY15 million.
Evergrande was ordered to liquidate in late January after the property developer failed to reach a restructuring plan with creditors. Evergrande defaulted on dollar bonds in 2021 after running up more than $300 billion in liabilities, helping spark a broader property crisis in China.
Write to Jiahui Huang at jiahui.huang@wsj.com
(END) Dow Jones Newswires
May 31, 2024 07:22 ET (11:22 GMT)
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