BEIJING/HONG KONG (Reuters) – China has fined China Evergrande’s onshore flagship unit 4.18 billion yuan ($577 million) for fraudulent bond issuance and illegal information disclosure, the China Securities Regulatory Commission (CSRC) said on Friday.
The regulator also fined Evergrande founder Hui Ka Yan 47 million yuan and barred him from the securities market for life, according to a statement.
The unit, Hengda Real Estate first revealed the planned penalties in a March filing, after a probe by the CSRC found that the developer had inflated revenue during 2019-2020 and issued bonds based on those falsified statements.
Evergrande, the world’s most indebted property developer with more than $300 billion of liabilities, defaulted on its offshore debt in late 2021 and was ordered by a Hong Kong court to liquidate early this year.
“The maximum fine (against Hengda) is the most severe since the unified law enforcement of the bond market,” said CSRC, adding it had considered Hengda’s bond issuance size and mandate to complete home constructions for buyers when making the decision.
The regulator also said it was pushing forward the investigation on relevant Hengda intermediaries, without giving details.
China is weighing imposing a record fine of at least 1 billion yuan on PricewaterhouseCoopers LLP and suspending some of the auditor’s local operations over its role in auditing Evergrande, Bloomberg News reported on Thursday.
Evergrande did not respond to a Reuters’ request for comment, but its spokesperson told the 21st Century Business Herald the company will cooperate with the regulators, and it has completed more than 80% of the developments across the country.
In Hengda’s March filing, it said CSRC’s probe found it had inflated revenue by 213.99 billion yuan, or half of the total, in 2019. In 2020, sales were inflated by 350 billion yuan, or 78.5% of the total.
Other senior executives, along with Hui, would also be barred from the securities market, the filing said.
($1 = 7.2435 Chinese yuan renminbi)
(Reporting by Albee Zhang and Ryan Woo in BEIJING, Clare Jim in HONG KONG; Editing by David Goodman and Emelia Sithole-Matarise)
