China Evergrande CEO, CFO Quit After Diverting Loan Proceeds
China's Evergrande Group chief executive officer and finance head resigned on Friday, July 22, 2022, after a preliminary investigation revealed their involvement in transferring loans secured by its publicly traded company to the group, Reuters reported.
Photo Insert: A residential Evergrande development
The troubled business was looking into how money belonging to the unit, Evergrande Property Services, worth 13.4 billion yuan ($1.99 billion), were used as collateral for pledge guarantees and confiscated by banks.
The pledges threatened to deplete the unit's cash reserves. The loans secured by the pledges, which involved three sets of deposits, were "transferred and diverted back to the group via third parties and were used for the general operations of the group," according to the business.
Global investors have focused on the Chinese developer's cash flow issues, fearing that a collapse would rock the financial system and stifle growth in the world's second-largest economy.
The beleaguered developer announced that CEO Xia Haijun, along with Chief Financial Officer Pan Darong, has resigned from the business due to his involvement in the arranging of the pledges.
Siu Shawn, the company's current executive director and chairman of the group's EV unit, has been named the new CEO. According to the corporation, Vice President Qian Cheng has been designated CFO.
Evergrande stated that it was in discussions with Evergrande Property Services about the payback timeline for the pledged sums. According to the corporation, the goal is primarily to set off the required sums by moving assets from the group to the unit.
In light of the preliminary results of the investigation, the developer stated that it will consider hiring an internal control consultant to perform a comprehensive evaluation of the company's internal control and risk management systems, and will issue a report after the investigation is completed.