Recently, Zhu Yongguo, a mainland shareholder, filed a report against Yi Huiman, the chairman of the Communist Party’s Securities Regulatory Commission (CSRC), for the Kangdexin lightning incident, which has been blocked on the Internet in the mainland. Recently, a knowledgeable person revealed that the incident involved the Chinese Communist Party‘s Securities Regulatory Commission harboring interest groups and letting small and medium shareholders take the blame.
According to the documents reported by Zhu Yongguo, the SFC was involved in the 2019 debt explosion of Kangde Xin Composites Group (Kangde Xin), acting as a shield, which directly led to 133,000 small and medium-sized shareholders being “cut leeks” and the subsequent continuous suppression of the rights defense process.
The CondeXin case has continued from 2018 to the present. Initially, the Securities Regulatory Commission of the Communist Party of China (SFC) said that it would investigate the appropriation of funds by the major shareholder of Kangde Xin, which once triggered a plunge in the share price of Kangde Xin.
In 2019, the SFC changed its tone and said that Kangde Xin was suspected of four consecutive years of financial fraud, illegal misappropriation of funds by its major shareholder and securities misrepresentation, and in July of the same year, it announced the suspension of Kangde Xin’s stock and faced delisting.
Previously in January 2019, Kangde Xin defaulted on a total of 1.5 billion (RMB, same below) bonds, but its financial report showed that the company had monetary funds of 15.316 billion yuan. Kangdexin said 12.2 billion was in the Bank of Beijing, which said its account balance was zero.
On March 8, a reporter for the Epoch Times learned from George (a pseudonym), an informant, that small and medium-sized shareholders of Kangde Xin have petitioned for the truth for two years, but have received no response, and that officials have been maintaining stability and delaying the petition. This is actually a kind of psychological deterrence.
The top to bottom cover up the covert operation let the small and medium shareholders take the blame
George revealed to reporters the inside story of this incident. He said that this incident is the top down to cover up the interest group, let the small and medium shareholders disguised responsibility.
“Kangde Xin bypassed the shareholders’ meeting and the board of directors, hollowed out the company, cashed out all its own shares, and then transferred a large amount of debt to the listed company, which is equivalent to taking away the good things and leaving the bad things to the small and medium shareholders. But the Communist Party’s Securities Regulatory Commission did not investigate.” He said.
He further said that Yi Huiman, the current chairman of the CPC Securities Regulatory Commission, had a loan relationship with Zhong Yu, the former chairman of Kangde Xin, when he was the president of Jiangsu ICBC branch; after the crisis of Kangde Xin broke out, without going through the shareholders’ meeting and announcement, he illegally mortgaged 425 sets of core equipment and 3 pieces of land, totaling roughly $2.8 billion, to ICBC, and the CPC Securities Regulatory Commission did not investigate this, which is tantamount to acquiescing to the situation.
On the other hand, Bank of Beijing had signed an agreement with Kangde Xin to transfer all the incoming funds of the listed company to its parent company, Kangde Group’s account in Xidan of Bank of Beijing, which still shows in the records of Bank of Beijing that these funds are in Kangde Xin’s account, and has issued statements, interest payment bills and net banking for four consecutive years, and issued a letter of inquiry back to the auditing firm.
“This is the same as saying that it (the majority shareholder) robbery are not necessary to rob, robbery are not necessary to fight, every second to sit at Home well, the listed company earn in a penny, to his account, this listed company is equal to the complete lack of independence and property autonomy.” George said, “When the Kangde Xin crisis did not break out, no one knew about this secret channel.”
After the crisis broke out, the Communist Party’s Securities Regulatory Commission said it was not an embezzlement, saying the funds had been repatriated. George said that this is an insult to the intelligence of the people, each flow of funds to correspond to a contract, the majority shareholder sitting at home with the money for four years, and then a sentence to say that it is returned to you, which is a trick in order to rely on money.
Before Zhu Yongguo’s real name report, Ruihua Accounting Firm, which did the audit for Kangde Xin, sued the Communist Party’s Securities Regulatory Commission. The CCP SEC fined the firm 5.2 million yuan for the Kangde Xin incident; the firm said that a letter from the Bank of Beijing could prove Kangde Xin’s deposits, but the Bank of Beijing refused to release the flow of the imputed funds. The Ruihua accounting firm, once ranked No. 1 on the mainland, is facing closure after the Kangdexin burst.
Officials make a lot of money underwriting interest groups
George said that the up-and-down harboring and underhanded operation, the result is that the CPC Securities Regulatory Commission raw findings (financial fraud), hard to drag the small and medium shareholders into a procedural point, and according to this procedure now, is bound to mandatory delisting.
He revealed that it was actually the CCP’s SEC downward all the way to cover up the act, the SEC counted all the funds appropriated by the interest groups of all parties as false accounts, a write-off, and the local government did not have to take money out.
The interest groups have already grabbed the benefits in hand, such as ICBC grabbing $2.8 billion in mortgages; Minsheng Bank grabbing $1.59 billion for three pieces of land; and the local government getting billions in tax revenue. Small and medium shareholders questioned why Kangdexin reported tens of millions of tax per month, which is extremely absurd in itself, if there is no reason to collect taxes if it is really a financial fraud as claimed by the Communist Party’s Securities Regulatory Commission.
George also said that in addition to Bank of Beijing, ICBC and Minsheng Bank, there are also CCP central enterprises involved behind the Kangdexin incident, Xiamen International Bank, etc. For example, Kangde Xin had signed an illegal and false purchase agreement with China Chemical Corporation to cheat 2.174 billion fund-raising funds; it had also signed an agreement with Bank of China Trust through Xiamen International Bank to pledge off 1.5 billion fund-raising funds in violation of the law to lend to Kangde Group.
Small and medium shareholders become poor overnight is experiencing “secondary damage”
George said: “For the small and medium shareholders, delisting means zero, which is a sack in broad daylight, which is the history of mankind, Chinese history has not been. Previously, the looting also took a knife, take a gun to the people’s homes to rob, now no longer need, the electronic trading system in all cheating in, all at once slaughtered, to zero.”
George revealed that the 133,000 small and medium shareholders, many of them are civil servants, police officers, and poverty alleviation officials; after the Kangde Xin incident, they found themselves overnight turned into poor households.
George said that the reason why small and medium shareholders invested in Kangde Xin in the first place was because the Chinese Communist Party officially stood up and endorsed Kangde Xin. The Communist Party’s CCTV has promoted the listed company, whose market value was once close to 100 billion, five times in a row, and Kangde Xin was officially named “Suzhou Outstanding Listed Company”.
After the collapse of Kangde Xin, officials have been suppressing media reports and have not reported the matter freely and openly, so small and medium shareholders have not been able to defend their rights and complaints reasonably and legally.
Small and medium-sized shareholders have attended two hearings of the Communist Party’s Securities Regulatory Commission, but were required to sign confidentiality agreements. The small and medium shareholders questioned that there must be hidden secrets and deceptions.
In addition, after the major shareholder hollowed out the company, he still controlled the board of directors, and even an “acquaintance” of the chairman of the SFC left ICBC, where he had worked for more than 30 years, and was placed in Kangde Xin in an attempt to prevent the small and medium shareholders from pursuing their responsibilities, resulting in the suppression of 14 out of 17 proposals for the August 2020 shareholders’ meeting.
George said 133,000 small and medium shareholders have been crying out for two years, but no one really thinks about their demands, no one really sympathizes with the people, and now all parties treat small and medium shareholders as a burden. “Small and medium shareholders are being hurt twice, and the so-called ‘law enforcers’ are screwing them to death, which is what destabilizes society, and these interest groups are shiny and bright in appearance, but in fact they are sucking blood from the people.” He said.
He revealed that there are many righteous forces on the mainland that are secretly helping these small and medium shareholders, and they will not give up.
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