The Chinese giant Evergrande fined 532 million euros for fraud

The descent into hell continues. Chinese businessman Evergrande, with astronomical debt and who has become a symbol in China of the real estate crisis, has been fined 532 million euros for infringements, the stock market regulator announced on Friday (May 31).

The failures of the group, formerly number one in the real estate sector in China, have fueled mistrust since 2020 in a sector that has long been very profitable but is now being shunned, in a context of economic slowdown and unfinished housing.

“Between 2019 and 2020, Evergrande Real Estate (the group’s real estate subsidiary, ed.) inflated its turnover and profits, which led to a fraudulent issuance of bonds on the stock market,” the authority noted of regulation. Evergrande is therefore fined 4.2 billion yuan, it said in a press release, which is equivalent to 532 million euros.

The group’s founder, Xu Jiayin, faces a fine of 47 million yuan (6 million euros), the regulator said. According to press reports last year, Xu Jiayin is reportedly under house arrest.

The group never confirmed or denied but acknowledged that the former leader was “subject to coercive measures because he was suspected of a crime or an offense contrary to the law”, without providing further details on the nature of the alleged facts. In China, the term “coercive measures” generally refers to a form of deprivation of liberty intended to ensure the smooth conduct of criminal proceedings.

The Evergrande group, whose descent into hell regularly makes headlines, had a colossal balance sheet estimated at $328 billion (€307 billion at the time) at the end of June 2023. Evergrande’s failures have led to a crisis of confidence in China that has engulfed groups previously considered financially sound, such as Country garden one of Evergrande’s competitors.

The real estate sector in the broad sense has long accounted for more than a quarter of China’s GDP and is an important source of employment. But this key sector is now under pressure, with falling prices dissuading the Chinese from investing in the stone. Beijing’s support measures for the sector have so far had little effect.

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