China Evergrande CEO and CFO resign after embezzlement investigation (OTCMKTS:EGRNF)
The CEO and CFO of China Evergrande Group (OTCPK:EGRNF) (OTCPK:EGRNY) have resigned from the indebted property developer after preliminary results of an investigation revealed the two were involved in misappropriating loans intended for its Evergrande Property Services unit listed in Hong Kong at the parent company and used for general operations.
The company’s review of its financial report for the year ended December 31, 2021 revealed that deposits of approximately RMB 13.4 billion ($1.98 billion) used as collateral for third party guarantees in pledge had been applied by the banks concerned. Evergrande (OTCPK:EGRNF) is currently in talks with Evergrande Property Services regarding the repayment of pledge monies, the company said in a regulatory filing on Friday.
“In light of the above preliminary findings of the independent investigation, the company will consider appointing an internal control consultant to conduct a comprehensive review of the company’s internal control and risk management systems,” Hui Ka said. Yan, president of Evergrande (OTCPK: EGRNF). said in the press release.
After the preliminary results, Xia Haijun resigned as director and CEO and Pan Darong resigned as executive director and chief financial officer, due to their involvement in the arrangement.
With the resignation of both, Liu Zhen, currently Vice President of Evergrande (OTCPK:EGRNF) has been appointed Executive Director. He has held positions such as Chairman of Xinjiang Company of Evergrande Real Estate Group and Vice Chairman of China Evergrande New Energy Vehicle Group (OTC:EVGRF).
Qian Cheng, also currently the company’s vice president, has been named chief financial officer. He joined the company in July 2018 and has held various financial management positions, the company said.
The company, saddled with about $310 billion in debt, has been struggling with a cash crunch since last fall as Beijing took a tougher stance on real estate development amid heavy debts in China. Evergrande (OTCPK:EGRNF) and fears of a real estate bubble.
Last week the the wall street journal reported that China Evergrande (OTCPK:EGRNF) management was eager to release some details of a preliminary restructuring plan later this month, as creditors urged the company to wait until they may set certain conditions.
In May, China Evergrande (OTCPK:EGRNF), which defaulted on some of its $19 billion in offshore bonds, reportedly considered a plan to repay offshore bondholders with cash installments and equity in two of its units listed in Hong Kong.