Evergrande chief and finance head resign after probe finds they misused $2bn in loans

Evergrande defaulted on dollar-bond payments after liquidity scares began in 2020

Indebted Chinese developer Evergrande Group said that its chief executive officer and chief of finance have resigned after an internal investigation revealed their involvement in misusing nearly $2bn in loans.

Chief executive Xia Haijun and chief financial officer Pan Darong were involved in diverting loans secured by its publicly listed property services unit to the wider group, the company said in a statement on Friday.

The loans secured by pledges involving 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”.

“Based on the information from the preliminary investigation”, the duo “participated in the above arrangement”, the company said. “In view of this, the board resolved to request such persons to resign from their positions within the group.”

Once considered China’s largest real estate firm, Evergrande last year defaulted on dollar-bond payments after liquidity scares began in 2020. The company has over $300bn of liabilities, including $20bn of offshore dollar-denominated bonds.

Amid the ongoing property crisis in China, Evergrande’s share has fallen by more than 75 per cent over the last year.

Siu Shawn, an executive director and chairman of the group’s EV unit has been named as the new chief executive officer. He reportedly said that the firm has reached a “basic consensus” on debt restructuring principles with multiple major creditors.

Vice president of the company Qian Cheng has been appointed the finance head.

Beijing is expected to set up a real estate fund to help developers resolve the crippling debt crisis, aiming for a coffer of up to $44bn, Reuters reported, citing state bank sources.

The fund would be made available to support more than a dozen property developers, including embattled Evergrande.

According to sources, the amount would be used to bankroll the purchases of unfinished home projects and complete their construction to rent them under the government’s drive to boost rental housing.