China's real estate developer Evergrande Group has confirmed the resignation of an executive board member after being embroiled in a controversy over misappropriation of loans secured by its publicly listed unit.
It is understood that the Chief Executive Officer (CEO), Xia Haijun and Chief Financial Officer (CFO), Pan Darong resigned after an investigation found that deposits worth $199 billion belonging to Evergrande Property Service were used as collateral for mortgage guarantees and seized by banks.
According to company sources, the loan secured through the guarantee involved 3 sets of deposits which were 'transferred and transferred through a 3rd party to be used in the group's general operations'.
The act of misappropriation of the guarantee also indirectly interfered with a large part of the cash held by the unit.
Following the resignation of the executive, Evergrande also scheduled the repayment of the guarantee amount to Evergrande Property Services.
In addition, Evergrande is seen appointing Si Shawn who was previously the director and chairman of the group's electric vehicle (EV) unit as the new CEO while Deputy President Qian Cheng is the replacement for the CFO.
For now, the world's most indebted firm continues to be under pressure as it needs to convince investors that it has sufficient cash flow to ensure the financial system of the world's largest economy does not collapse.
As a reminder that due to the 'default' rating received by Evergrande, the Chinese government had to intervene to ensure that the firm's financial system did not affect the 'great wall' country.
