Millions in fines for falsifying balance sheets and exclusion from stock trading: Chinese authorities are taking action against the head of the heavily indebted Chinese real estate group Evergrande.
Authorities in China have banned the founder and chairman of the supervisory board of the heavily indebted real estate group Evergrande from trading on the financial market for life. He is accused, among other things, of accounting falsification. In addition to the lifelong ban from the stock exchange, Xu Jiayin is also expected to pay a fine of around six million euros.
Fines for six other managers
In addition to the founder and chairman of Evergrande, the Chinese stock market regulator has fined six other current and former managers.
Xu was placed under police supervision last September. Under his leadership, Evergrande is said to have artificially inflated its balance sheet by the equivalent of around 80 billion euros in 2019 and 2020 and issued bonds based on this embellished information.
He founded the group in 1996 and was chairman of the board until 2022. With an estimated private fortune equivalent to more than 40 billion euros, Xu was at times considered the richest man in China.
Most indebted property developer in the world
Evergrande is at the center of the misery on the Chinese housing market, which contributes a quarter of economic growth in good times. Because debt within the industry had grown steadily, China’s authorities restricted credit procurement in 2020. Evergrande in particular had to cancel projects and accept payment defaults. The company is now the most indebted property developer in the world with liabilities of more than 300 billion euros.
Following complaints from creditors, a court in the Hong Kong Special Administrative Region ordered the dissolution of Evergrande at the beginning of the year. However, it is unclear whether the ruling will be implemented in mainland China, where the group does most of its business.
Concerned about the anger of many people who have invested money in unfinished apartments, China’s state and party leadership is now trying to support the real estate market and make lending easier again.
Christoph Kober, ARD Beijing, tagesschau, March 19, 2024 8:47 a.m