On the verge of sinking, the Evergrande group dismisses its director

The Chinese real estate developer Evergrande, ultra-indebted and symbol of the crisis in the sector in China, forced the resignation of its CEO and its financial director after an internal investigation implicating them.

These departures come at a time when the company, in dire need of cash, is fighting for its survival and is trying to conclude a restructuring agreement for its debt estimated at around 300 billion dollars.

Why was $2 billion seized?

Evergrande was investigating why banks unexpectedly seized 13.4 billion yuan ($2 billion, 1.9 billion francs) in bank deposits from its real estate services unit, Evergrande Property Services. The group had launched an internal investigation, with the help of lawyers and accountants, in order to clarify the facts.

According to the statement released by Evergrande on Friday evening, the money was seized by the banks because it was in effect serving as a “mortgage guarantee” so that a “third party” could obtain a bank loan.

Funds obtained from the loan were “diverted to the group through third parties and used for general group operations” Evergrande, according to the company.

Read also: In the face of uncertainty, the stabilization of China remains decisive

Executive director becomes CEO

“Given the context, the board of directors has decided to demand the resignation” of the executives involved, including the CEO of China Evergrande Group, Xia Haijun, as well as the chief financial officer, Pan Darong, notes the press release, published on the website of the Hong Kong Stock Exchange, where it is listed.

The group’s former chief executive, Siu Shawn, has been named CEO.

Collapse, a major risk

To get its head above water, Evergrande, a former Chinese real estate champion, has been trying in recent months to sell assets and reduce its stakes in other companies.

Markets are watching developments with concern as the potential collapse of this group, which once claimed 200,000 employees, could have disastrous consequences for the economy.

After years of laissez-faire where real estate developers have massively resorted to loans to finance their development, many of them are now in difficulty due to the government’s desire to reduce their indebtedness, which has led to a serious crisis. of cash.

Also read: Evergrande, real estate on steroids

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