Biggest Chinese developer accused of fraud

China Evergrande Group, the defaulted developer at the heart of China's real estate crisis, falsely inflated revenue by more than $78 billion in the two years leading up to its failure, according to the nation’s top securities regulator, Report informs referring to Bloomberg.

Evergrande's main onshore unit Hengda Real Estate Group boosted its 2019 income by about 214 billion yuan ($29.7 billion) by recognizing sales in advance, and another 350 billion yuan in the 2020 annual results, the developer said in a filing Monday, citing a notice from the China Securities Regulatory Commission.

The CSRC laid much of the blame on Hui Ka Yan, the founder and former chairman who allegedly instructed other personnel to “falsely inflate” Hengda’s annual results for those two years. As the supervisor in charge, Hui used particularly “egregious” means, the regulator said. Hengda was also accused of fraudulently issuing a combined 20.8 billion yuan in bonds using these figures in marketing.

The CSRC fined Hui 47 million yuan for the falsified results and other alleged violations, and banned him for life from capital markets activities, according to the regulator’s preliminary finding. Hengda was fined 4.18 billion yuan. China Evergande’s former Chief Executive Officer Xia Haijun and Chief Financial Officer Pan Darong were among executives also punished by the regulator with fines and market bans.