Evergrande Unit Fined $577 Million for Misconduct

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Evergrande, one of China’s largest developers, has been mired in a liquidity crisis since 2021

China’s securities regulator imposed fines totaling 4.18 billion yuan ($577 million) on China Evergrande Group’s main domestic unit for alleged financial misconduct, the latest blow to the property giant that is currently undergoing liquidation proceedings.

The China Securities Regulatory Commission (CSRC) Friday said it would fine Hengda Real Estate Group Co. Ltd. (恒大地产集团有限公司), the flagship onshore unit of Evergrande, for fraudulent bond issuance and illegal information disclosure.

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The China Securities Regulatory Commission (CSRC) fined China Evergrande's Hengda Real Estate Group Co. Ltd. 4.18 billion yuan ($577 million) for fraudulent bond issuance and illegal information disclosure.
Evergrande’s founder Hui Ka Yan was fined 47 million yuan ($6.5 million) and banned for life from the securities market; six other senior executives were also punished.
Hengda inflated revenue and profits significantly in 2019 and 2020 and failed to disclose major litigation cases and overdue debts.

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Who’s Who

China Evergrande Group: China Evergrande Group, one of China’s largest developers, is embroiled in a severe liquidity crisis since 2021. Its main domestic unit, Hengda Real Estate, was fined 4.18 billion yuan by the China Securities Regulatory Commission for financial misconduct, including fraudulent bond issuance and inflating revenue and profits. Evergrande’s founder, Hui Ka Yan, received a lifetime ban from the securities market. The company is undergoing liquidation after failing to restructure its debt.

Hengda Real Estate Group Co. Ltd.: Hengda Real Estate Group Co. Ltd. is China Evergrande Group's main domestic unit, found guilty of financial misconduct. It inflated its revenue and profits in 2019 and 2020, issued fraudulent bonds, and failed to disclose critical financial information. The China Securities Regulatory Commission fined Hengda 4.18 billion yuan and ordered the company to hand over 20% of proceeds from the bond sales. Additionally, significant litigation and overdue debts were undisclosed.

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What Happened When

Since 2021：: Evergrande has been mired in a liquidity crisis.

By August 31, 2023：: Hengda failed to disclose 1,533 major litigation and arbitration cases since January 1, 2020, involving a total of 431.3 billion yuan. Overdue debt had reached 278.5 billion yuan, which also had not been disclosed.

September 2023：: Hui Ka Yan, once among Asia’s richest tycoons, was placed under investigation and subject to mandatory measures due to suspicion of crimes.

January 2024：: A court in Hong Kong ordered Evergrande to be liquidated after failing to come up with a debt restructuring plan.

March 2024：: Hengda unveiled the impending fines after the CSRC conducted an investigation into the company.

April 2024：: Hong Kong’s accounting regulator announced it would investigate allegations over PwC’s role in auditing Evergrande after a 'whistleblower report'.

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