(Bloomberg) -- Xia Haijun, the former CEO of China Evergrande Group, has been thrust back into the limelight as liquidators of the defaulted developer try to claw back money to repay creditors.
This week brought a renewed focus on Xia, who was forced to resign in 2022 after an investigation showed he was involved in arranging undisclosed loan guarantees. Now two years later, Xia’s lawyers found themselves at a court in Hong Kong on Wednesday.
The hearing was meant for arguments concerning injunctions liquidators got earlier this year restraining Xia and others from disposing their assets around the world. The hearing ended without a judgment, which means the injunction is for now left in place.
A look through the exchanges between the legal representatives on both sides sheds fresh light on the complex liquidation of the developer, which has been at the center of China’s property debt crisis since a default in 2021 opened the door to record debt failures from other builders.
In the court hearing Wednesday, Xia’s legal representatives said that he was CEO of the parent company, not the developer’s primary onshore unit, Hengda Real Estate Co., and wasn’t responsible for preparing financial statements at the subsidiary.
“All the frauds are related to the subsidiaries, but not my client,” Xia’s lawyers said.
Xia’s legal team also said he was misled by financial reports audited by PricewaterhouseCoopers LLP. The accounting firm was fined 441 million yuan ($62.8 million) by Chinese regulators in September for its auditing work related to Evergrande’s onshore unit from 2018 to 2020.
Liquidators said it was “unacceptable” for Xia to claim that he didn’t have responsibility. They said that Xia was among the executives who approved dividend payouts based on the company’s financial reports, which included subsidiaries’ accounts.
Edward Middleton and Tiffany Wong of Alvarez & Marsal Asia Ltd., appointed as Evergrande’s liquidators in January, have taken steps to recoup some of what creditors are owed.
Earlier this year, they filed a lawsuit to recover $6 billion in dividends and remuneration given to seven individuals, including the developer’s founder Hui Ka Yan, Hui’s ex-wife Ding Yumei, Xia and former Chief Financial Officer Pan Darong, according to a company filing.
They have also started legal action against PricewaterhouseCoopers and PricewaterhouseCoopers Zhong Tian LLP, the auditor’s mainland China arm.
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