China Evergrande Group exaggerated its income by greater than $78 billion and dedicated securities fraud over two years earlier than its spectacular collapse in 2021, a prime Chinese language regulator mentioned.

The China Securities Regulatory Fee accused Hui Ka Yan, the founding father of Evergrande, of “making selections and organizing fraud,” the corporate reported in a submitting to the Shanghai and Shenzhen inventory exchanges on Monday evening.

Mr. Hui was fined $6.5 million and banned from China’s monetary markets for all times. Xia Haijun, a former chief govt, was fined $2 million and likewise banned from monetary markets, together with a number of different executives. The corporate’s most important onshore unit, Hengda, was fined $580 million.

The New York Instances reported in December that questionable accounting and poor oversight led to Evergrande’s demise. Over time earlier than it defaulted on its debt, Evergrande had been treating cash it acquired for residences as income despite the fact that at instances it had not constructed these residences, the Instances reported.

Within the firm submitting, Hengda laid blame solely on Mr. Hui. As chairman of Evergrande, Mr. Hui was in command of all the corporate’s actual property enterprise and “instructed different personnel to falsely improve the efficiency,” the corporate wrote.

He did so, it added, “with exceptionally unhealthy means and exceptionally critical circumstances.”

Regulators discovered that Hengda inflated its income by practically $30 billion in 2019 and by $48.6 billion in 2020. Then it raised cash in monetary markets based mostly on the falsified numbers.

The event is one more blow to Evergrande’s already shattered fame. As soon as an emblem of China’s entrepreneurial success and ambition, Evergrande is now a reputation that angers owners throughout China.

Evergrande has change into essentially the most seen instance of China’s actual property disaster. Its failure, below $300 billion of debt, heralded the most important wave of property defaults in trendy historical past. China’s prime leaders at the moment are making an attempt to wean the $18 trillion economic system off development, a sector that when contributed to a 3rd of the nation’s development and employed a lot of its staff.

After it defaulted, Evergrande tried to work with non-public lenders and worldwide traders who had lent it tens of billions of {dollars} abroad. Final summer time, the corporate reported that it had made progress towards a restructuring deal.

Then, in September, Mr. Hui was detained by authorities and all restructuring talks got here to an finish.

Hong Kong courtroom ordered Evergrande to be liquidated in January.

Zixu Wang contributed reporting from Hong Kong.

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