China’s securities watchdog has accused struggling developer Evergrande and its founder of inflating revenues by $78bn over 2019 and 2020 before the company defaulted on its debt.
According to a filing made by the company on China’s mainland stock exchanges, the China Securities Regulatory Commission (CSRC) intends to impose fines of $6.6mn on founder Hui Ka Yan and $580mn on Hengda Real Estate, Evergrande’s mainland business.
Mr. Hui, once ranked as China’s richest man, also faces a lifetime ban from the country’s financial markets.
The regulatory body accused him of directing personnel to manipulate company metrics.
Evergrande’s massive debt, which exceeds $300 billion, led to the company’s default in late 2021 and triggered a ripple effect that impacted other developers and the broader economy.
In January, the company was ordered into liquidation by a Hong Kong court, leaving creditors with pennies on $20bn worth of defaulted offshore bonds.
Liquidators have been tasked with evaluating Evergrande’s overall financial state and exploring potential restructuring options.
Despite nearly two years of negotiations, involving offshore investors and the company, no viable restructuring plan emerged.
China’s real estate sector, which constitutes a significant portion of the world’s second-largest economy, has been under strain since 2021 due to governmental restrictions on borrowing for major developers.
As a result, several large property firms have defaulted on their debts.
