+ Reply to Thread
Page 49 of 49 FirstFirst 1 39 49
Results 961 to 963 of 963

Thread: Turmoil in China

  1. Link to Post #961
    Avalon Member Ravenlocke's Avatar
    Join Date
    28th September 2011
    Posts
    9,594
    Thanks
    7,457
    Thanked 98,620 times in 9,592 posts

    Default Re: Turmoil in China

    https://x.com/JackStr42679640/status...18929388933432



    https://www.asiasentinel.com/p/everg...et-restructure

    Evergrande ‘Ponzi Scheme’ Likely Sparks Major Property Market Restructure
    Chinese economy and Hong Kong face dilemma over developer’s US$78 billion fraud

    China’s already-bleak property market is expected to undergo significant restructuring and, considerably, more pain following the US$78 billion fraud involving the bankrupt Hong Kong-listed China Evergrande Group, which leaves millions of mainland homeowners without homes they paid for and also presents challenges for Hong Kong as an international financial hub as the city seeks to shake off global opprobrium from Beijing’s tightening political takeover.

    Evergrande defaulted in December 2021 as the world’s most indebted property developer with US$300 billion of debt. The collapse of what had been the biggest Chinese developer by revenue is a major component of the credit troubles of China’s property market, which is dragging down the nation’s GDP growth. The company’s chairman Hui Ka Yan was detained in mainland China in September 2023. On January 29, the Hong Kong High Court ordered the liquidation of Evergrande.

    The China Securities Regulatory Commission (CSRC) accused Evergrande’s main subsidiary, Hengda Real Estate Group, of inflating its revenues by US$78.3 billion in 2019 and 2020, according to Hengda’s announcement on March 18. Hengda inflated its revenue for 2019 by RMB214 billion (US$29.7 billion), double its actual revenue, CSRC alleged, and inflated its 2020 revenue by RMB350 billion (US$48.6 billion) eight times its actual revenue, CSRC alleged. The securities watchdog accused Hengda of fraudulently issuing billions of dollars of bonds based on its falsified financial results and of failing to disclose in a timely manner its inability to repay RMB278.5 billion (US$38.7 billion) of debt.

    “Evergrande was a Ponzi scheme and will be a big criminal case with a full loss for all shareholder and bondholder,” said Marco Metzler, a German credit analyst, on his LinkedIn account on March 19. It is the biggest fraud scandal in the history of China and possibly the world.

    “We shall see a lot of restructuring in the future, and SOEs (state-owned enterprises) will take over a lot of private enterprises in this sector,” a Hong Kong property advisory executive told Asia Sentinel. “Since real estate and its related sectors represent around 40 to 50 percent of China’s GDP, so it is unavoidable that China’s economy will have to face a hard hit in the next three to five years.”

    The Chinese government, he said, “will implement a lot of new measures to the real estate market to ensure all the non-SOE developers will have a healthy balance sheet without overleverage in the future. However, the Chinese government is still too busy to sort out how to avoid the real estate market fall into the spiral downward trend, so all new measures will only be implemented after the crisis is over, which may take years.”

    The scandal is also a no-win situation whether Chinese courts follow the Hong Kong court order or not, said the Hong Kong property advisory executive. “If the Chinese court is not going to follow the Hong Kong court order to liquidate Evergrande’s mainland assets to pay back the offshore creditors, then the whole world will question about why these deals structured in Hong Kong can’t protect the foreign investors, which will have huge long-term implications to Hong Kong’s financial credibility and Chinese companies’ global financing opportunities, especially in US dollar debt.”

    On the other hand, the executive added, “if the Chinese court follows the Hong Kong court order to liquidate Evergrande’s mainland assets to pay back offshore creditors, then massively troubled Chinese developers with offshore US dollar loans will face similar court orders, then the Chinese real estate market will be affected badly again.”

    “This may be the beginning of a painful healing process, starting with prosecution and the removal of people perceived to have been responsible, then consolidation and restructuring of Evergrande using SOE support and then finally winding up of those elements which cannot be propped up,” Steve Vickers, the chief executive officer of Steve Vickers Associates, a regional political and corporate risk consultancy, told Asia Sentinel. “There is little hope for foreign bond holders, especially those who used grey area offshore structures to invest.”

    At a press conference in Beijing on March 9, Ni Hong, China’s Minister of Housing and Urban-Rural Development, said Chinese developers that are insolvent should go through bankruptcy or restructuring, as the government’s priority is to ensure delivery of property projects to home buyers, not protect developers’ business. The Chinese government fears the social instability that can result from Chinese homebuyers who do not get their homes.

    “It seems to us that the central government is still not too concerned about the property sector’s downward spiral, a down cycle which has lasted for two and half years,” said a Nomura report on March 10. “We thus expect the sector’s fundamentals to remain under pressure amid limited potential policy support. Given the still-sluggish primary home sales year-to-date 2024, property developers’ cash flows will continue to be under significant pressure.”

    Evergrande’s fraud

    The CSRC banned Hui from the mainland Chinese securities market for life and fined him RMB47 million (US$6.5 million), according to Hengda’s announcement on March 18. The regulator fined Hengda RMB4.18 (US$580 million) and also penalized several of the company’s former senior executives.

    Hui Ka Yan, whose name in Mandarin is Xu Jiayin, resorted to “especially evil tactics” to instruct Hengda executives to inflate financial results, the CSRC alleged. “The circumstances of this are particularly serious.” In the language of the Chinese Communist government, being accused of “particularly serious” crimes spells a death sentence or long imprisonment for the accused.

    Hui will not be executed but will probably be jailed for 20 years to life, said a China watcher who asked not to be named. “Hui must be seen to be punished heavily because he is now being used as a scapegoat to appease the millions of people who have bought the unfinished flats (of Evergrande), despite having paid for them.”

    Hui could have undertaken a fraud as huge as this only with the support of Chinese officials and influential political families, added the China watcher.

    Question marks also hang over the fate of PwC, the international Big Four accounting firm which audited Evergrande’s financial statements. On August 15, 2022, the Hong Kong Accounting and Financial Reporting Council announced it was investigating Evergrande’s financial statements for 2020 and the first half of 2021. The audit watchdog also disclosed it was investigating PwC for its audit of the 2020 financial statements.

    Fraud had earlier been detected in Evergrande. On February 18, 2022, a holder of Evergrande bonds, Liechtenstein-based Financial Market Partners Capital (FMPC) Consulting AG, filed an allegation of criminal conduct for insolvency fraud against Evergrande in the Cayman Islands, where the property developer is registered.

    Last month on his LinkedIn account, Metzler predicted, “The management will be alleged of fraud operating a Ponzi scheme since the beginning of operations and deliberately delaying the winding-up to benefit from fire sales. Projects in mainland China will be taken over by the local and national government. There will be (absolutely) nothing left for international bondholder and shareholder and even the liquidator will chase for the payment of winding-up the complex group.”

    On June 21, 2012, Andrew Left, a US short seller, published a report on the website of his firm Citron Research accusing Evergrande of presenting fraudulent information to the investing public. Ironically, in October 2016, Hong Kong’s Market Misconduct Tribunal banned Left from trading securities in Hong Kong for five years for his allegations, which have just been confirmed by the Chinese government. On August 26, 2016, the tribunal said Left had published “false or misleading information” in his damning report on Evergrande.

    Toh Han Shih is chief analyst of Headland Intelligence, a Hong Kong risk consultancy
    "Hope is the thing with feathers that perches in the soul and sings the tune without the words and never stops at all."
    - - - - Emily Elizabeth Dickinson. 🪶💜

  2. The Following 4 Users Say Thank You to Ravenlocke For This Post:

    avid (Yesterday), Bill Ryan (25th March 2024), Harmony (26th March 2024), pounamuknight (26th March 2024)

  3. Link to Post #962
    Avalon Member Ravenlocke's Avatar
    Join Date
    28th September 2011
    Posts
    9,594
    Thanks
    7,457
    Thanked 98,620 times in 9,592 posts

    Default Re: Turmoil in China

    https://x.com/FinancialReview/status...92598672150743



    https://www.afr.com/world/asia/china...box=1711166017


    China scrutinises PwC role in $118b Evergrande fraud case

    Chinese officials are now looking into PwC as they continue their probes of the developer’s founder Hui Ka Yan, according to people familiar with the matter. They are in contact with some former PwC accountants who handled Evergrande’s audit, one of the people said, asking not to be identified discussing a private matter.

    The firm’s practice in Australia — which is also slashing jobs — came under fire for leaking confidential government tax plans to clients. PwC’s UK arm was hit with a £5.6 million fine last year for failures in its work on Babcock International Group’s books.

    “There are serious questions about PwC’s role in the Evergrande fraud, specifically what it knew about the improper revenue recognition,” said Nigel Stevenson, an analyst at accounting research firm GMT Research in Hong Kong.

    GMT has previously questioned the accuracy of Evergrande’s financial reporting, and alleged in December 2023 that the developer may have never been profitable. In response, Evergrande said the research firm’s recent report was “without basis.”

    ‘Very real’ risk to PwC’s reputation

    By inflating revenue, Hengda also overstated a total of 91.9 billion yuan ($19.4 billion) in profit, or more than three-quarters of its reported income between 2019 and 2020, according to the China Securities Regulatory Commission. That’s about 20 times the inflated profit at Enron’s 2001 scandal, which ultimately brought down its auditor Arthur Andersen.

    “Checking for this type of misstatement is one of the most basic of audit routines,” said Richard Murphy, professor of accounting practice at Sheffield University in the UK. “The risk to PwC’s reputation, not just in China but more broadly, is very real.”

    Prior to 2021, Evergrande recorded revenue from contracted sales of many projects before completing and delivering the homes to buyers. Its aggressive revenue-recognition tactics enabled the developer to report lower liabilities and leverage ratios during those years, which facilitated its sales of domestic and international bonds.

    The world’s most indebted developer began having cash-flow problems in 2021 and spiralled into default, imperilling millions of apartment units that it had pre-sold to buyers but hadn’t completed.

    While Chinese regulators laid much of the blame on Evergrande’s Hui, their allegation could create legal trouble for PwC. Evergrande is currently going through liquidation proceedings in Hong Kong, and liquidators that are trying to recover money for the company’s creditors may go after deep-pocketed PwC for compensation, according to several lawyers and insolvency practitioners, who asked not to be identified discussing a sensitive matter.

    The regulator’s fine of 4.18 billion yuan on Hengda also means Evergrande will have even less money to pay off its creditors. The Chinese developer was saddled with about $US332 billion in liabilities as of June 2023.

    Chinese authorities have previously come down hard on accounting firms for lapses in their audits of domestic companies. Last year, the Ministry of Finance slapped a record 212 million yuan fine on Deloitte’s China unit and suspended the operations of its Beijing office for three months for “serious audit deficiencies” in its work on state-owned China Huarong Asset Management between 2014 and 2019. The bad-debt manager received a $US6.6 billion bailout in 2021 after reporting massive losses.

    PricewaterhouseCoopers Zhong Tian, a Shanghai-registered firm that is part of PwC’s global network, was Hengda’s auditor during the period in question. PwC was Evergrande’s auditor for more than a decade until the global accounting firm resigned in January 2023, due to what the developer said were audit-related disagreements.

    PwC’s onshore arm, with more than 1600 certified accountants, reported revenue of 7.9 billion yuan in 2022, making it the top earner among more than 9000 local rivals, according to official data. Still, that’s a fraction of its global revenue of $US50.3 billion during the year.

    Among the big four accounting firms, PwC was one of the most commonly used by Chinese real estate firms listed in Hong Kong, according to data compiled by Bloomberg. It audited the books of some of the nation’s largest developers, including Country Garden Holdings and Sunac China Holdings, before they also defaulted on their debt.

    Over the past two years, however, PwC has resigned from at least 10 Chinese property companies including Sunac and Shimao Group Holdings, data compiled by Bloomberg showed.

    During the housing boom, most Chinese property developers raked in cash by selling partially built homes and promising to deliver them in a few years. Home buyers put down deposits and took out mortgages to buy the properties. Their money was supposed to be put in escrow accounts, and released to the developers when construction was completed.

    It is unclear if other property developers that were clients of PwC recognised revenue the same way as Evergrande. The Guangzhou-based company said last year that prior to 2021, it had recognised revenue when a property was accepted by a customer, or “deemed to have been accepted by the customer” based on the sales contract, whichever was earlier.

    After Evergrande ran into cash-flow problems, it decided that it should book revenue after the projects it pre-sold were completed, or occupied by their owners. It reported sharply higher liabilities for 2021 and 2022 — reflecting what it owed to those homebuyers — after changing its policies.

    “We weren’t aware that Evergrande was doing anything different from the rest of the industry,” said Tyran Kam, head of China property at Fitch Ratings. “Based on the information available to us, Evergrande’s revenue recognition and other accounting policies were generally perceived to be similar to the accounting practices to many of its listed peers,” he added.

    Credit-ratings firms, along with other market participants, would have relied on the audited financial statements when analysing the companies, Kam said.

    While many Chinese developers have stated in their annual reports similar revenue-recognition policies, Evergrande may have pushed the limits further.

    China Vanke Co, whose auditor is KPMG, said in its 2022 annual report that it recognises revenue from property sales when three criteria are met. That includes when “the property is accepted by the customer, or deemed as accepted according to the sale and purchase agreement, whichever is earlier.”

    PwC is also being investigated by Hong Kong’s Financial Reporting Council in 2021, after it failed to identify Evergrande’s inability to operate as a going concern. The inquiry by the city’s accounting watchdog was on Evergrande’s 2020 annual accounts and 2021 interim report.

    “The issue is that the auditing process is fundamentally broken, conflicted, and at times corrupted.” said Tom Kirchmaier, professor at the Centre of Economic Performance at the London School of Economics. “Hence, the problem might be bigger than PwC.”
    "Hope is the thing with feathers that perches in the soul and sings the tune without the words and never stops at all."
    - - - - Emily Elizabeth Dickinson. 🪶💜

  4. The Following 5 Users Say Thank You to Ravenlocke For This Post:

    avid (Yesterday), Bill Ryan (25th March 2024), Harmony (26th March 2024), Inversion (25th March 2024), pounamuknight (26th March 2024)

  5. Link to Post #963
    United States Avalon Member onawah's Avatar
    Join Date
    28th March 2010
    Language
    English
    Posts
    22,208
    Thanks
    47,680
    Thanked 116,092 times in 20,639 posts

    Default Re: Turmoil in China

    CCP's Desperate Propaganda Machine/Supported by the NY Times
    Bomb Threats and Sabotage—How the Campaign Against Shen Yun Is Escalating

    By Petr Svab
    March 25, 2024
    https://www.theepochtimes.com/articl...Tx2Qu%2BcGg%3D




    "‘These emails really are the last-ditch effort of a regime to hide the truth. It is vital that they do not succeed,’ says Shen Yun vice president.
    In the course of just over a week, three bomb threats have been made against Shen Yun Performing Arts—a top target of the Chinese regime due to its portrayal of “China before communism.”

    In addition to the bomb threats, which turned out to be empty, two of Shen Yun’s buses were vandalized in such a way to suggest an intent to cause a serious accident.

    The incidents are the latest in what appears to be an escalating campaign by the Chinese Communist Party (CCP) against the New York-based performing arts company.

    Shen Yun has become a global cultural force through its artistry and display of traditional Chinese culture, shaking the foundation of Beijing’s control over the cultural narrative.

    The first bomb threat targeted Shen Yun’s headquarters in upstate New York. The threat was made in a March 18 email sent from an email account with the sender’s name in Chinese.

    “I placed a remote-control bomb at Dragon Springs temple,” the email obtained by The Epoch Times read. Dragon Springs is the name of the site that is home to Shen Yun’s training facilities and several Tang Dynasty-style temples.

    A Shen Yun representative told The Epoch Times that the FBI is investigating the incident. The Epoch Times reached out to the FBI for comment.

    The other two threats were made to theaters with upcoming Shen Yun performances, including one on March 22 to a theater in California as Shen Yun was preparing for a weekend of shows.

    “We randomly placed a lot of bombs in the theater,” the email sent to theater administrators read. “If you don’t want us to detonate the bombs, please refuse Shen Yun Performing Arts to perform here immediately!”

    The sender’s name was in Chinese characters, different from the first threatening email, and the subject line stated in English, “The Theater has been bombed,” according to the email obtained by The Epoch Times.



    “If the show starts successfully, we will directly detonate these bombs!!!” it said. The email included a stock image of two bombs that had previously been published online.

    Upon receiving the email, theater staff evacuated the premises and local law enforcement conducted a search with bomb technicians and bomb detection K-9s, but found nothing.

    “This report was unfounded,” a spokesperson for the Santa Barbara Police Department told The Epoch Times. “As a precaution, law enforcement checked the theater throughout the weekend, with no evidence of any type of explosive device.”

    The spokesperson said the case and information “were forwarded to the FBI for further investigation.”

    The third threat was sent the same weekend to a theater in Vancouver, but performances weren’t interrupted.

    “I can confirm there was a bomb threat to the theater on Saturday afternoon. An investigation took place and it revealed the threat was false,” a Vancouver Police Department spokesperson told The Epoch Times.

    “Shen Yun shows the world just how profound, inspiring, and magnificent authentic Chinese culture was before the CCP seized power, while also offering a captivating vision for how wonderful China could be once again without the CCP,” said Ying Chen, a vice president with Shen Yun Performing Arts.

    “This is the last thing the CCP wants demonstrated so clearly on stages around the world, and so for more than 15 years, they have stopped at nothing to thwart Shen Yun.

    “Of course, we take these threats seriously and ensure law enforcement authorities are involved, but I think it’s also important to understand what these emails really are—the last-ditch effort of a regime to hide the truth. It is vital that they do not succeed."

    Tour Buses Sabotaged
    A week earlier, on March 15, two of Shen Yun’s tour buses had their tires slit in Costa Mesa, California. The tires were slashed in the exact same manner as in previous incidents: halfway through the rubber so that the tire wouldn’t deflate but would burst when driven on the freeway.

    A police report from the Costa Mesa Police Department detailed an “approximately 7-inch slash on the side wall.”

    “The damage looked like a fresh cut in the rubber,” the police report states.

    Due to previous similar incidents in the United States and Canada, in which the tires of Shen Yun’s tour buses were cut in the same way, the company has been forced to use security personnel to watch its buses day and night. In Costa Mesa, however, the buses were taken to a local garage for routine maintenance, and the cuts were noticed after they were picked up.

    The police report notes that Shen Yun representatives “suspected someone from the CCP followed the buses” to the service center and “took advantage of the bus not being guarded, and intentionally damaged the bus.”

    Police are still investigating the incident.

    CCP Fears Shen Yun
    The CCP views Shen Yun “as very dangerous” because of its efforts to revive and depict traditional Chinese culture, Trevor Loudon, an expert on communist infiltration in the West, previously told The Epoch Times.

    “They [the CCP] want to say Chinese culture is socialist,” he said.

    Shen Yun’s popularity has grown exponentially over the years, with the company now performing in 200 cities across the world for audiences totaling more than 1 million people a year. Its performances have been lauded by theatergoers around the world. Actress Cate Blanchett called it “exquisitely beautiful,” and author and motivational speaker Tony Robbins described it as “magnificent.”

    Before escaping to the United States, many of Shen Yun’s artists experienced religious persecution firsthand in China for their belief in Falun Gong.

    Falun Gong is an ancient Chinese spiritual practice consisting of slow-moving exercises and spiritual self-improvement based on the principles of truthfulness, compassion, and tolerance.

    Former CCP head Jiang Zemin launched his persecution against the group in 1999 after government surveys estimated that 70 million to 100 million people were practicing—figures that outnumbered the Party’s membership at the time.

    Human rights advocates have estimated that millions of Falun Gong adherents have faced unjust arrest, kidnapping, torture, and death at the regime’s hands.

    To intimidate Shen Yun artists, CCP police have badgered their relatives in China, and even imprisoned some of them.

    In previous years, Chinese embassies and consulates around the world have written to theaters to pressure them to stop Shen Yun from performing. In nearly all instances, the pressure was unsuccessful.

    “First, they threatened governments to not allow Shen Yun. When that didn’t really work, they started threatening theaters. When that didn’t really work, they started slashing our bus tires,” Ms. Chen said.

    “When that didn’t stop us, they started smear campaigns online and sent crazy emails to theater managers. Now, they have stooped even lower, sending ‘bomb threat’ emails.”

    Recently, members of one of the troupes were harassed at O’Hare International Airport in Chicago by a customs official speaking Mandarin with a mainland accent. The incident has spurred several Congress members to call for an investigation.
    Separate from the string of incidents, Shen Yun artists have been disturbed to learn that The New York Times has been working on a hit piece on the company, The Epoch Times recently reported.

    An article attacking Shen Yun published in a major American newspaper would be a boon for the CCP in its propaganda efforts, said Larry Liu, a deputy director of the Falun Dafa Information Center (FDIC), a nonprofit dedicated to monitoring the persecution of Falun Gong.

    The New York Times maintains offices in China and, despite setbacks, has invested substantial efforts into maintaining and expanding its China presence as well as access to the Chinese media market. "
    Each breath a gift...
    _____________

  6. The Following 2 Users Say Thank You to onawah For This Post:

    avid (Yesterday), Harmony (Yesterday)

+ Reply to Thread
Page 49 of 49 FirstFirst 1 39 49

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts