July 26, 2022: -On Friday, China Evergrande Group said that its chief executive officer and finance head have resigned after a preliminary probe found their involvement which diverts loans secured by its publicly listed unit to the group.

The indebted company, which invests the way deposits worth 13.4 billion yuan that belong to the unit, Evergrande Property Services, were used as collateral for deposit guarantees and seizing by banks.

The pledges threaten to wipe out most of the unit’s cash.

The company added that the loans secured by the pledges, involving three sets of deposits, “were transferred and diverted back to the group through third parties and were used for the general operations of the group.”

Global investors shifted their attention to the Chinese developer’s cash flow problems out of worry that its collapsing may shake the financial system and slow development in the second-largest economy in the world.

The embattled developer added that CEO Xia Haijun has resigned from the group because of his involvement in arranging the pledges with Chief Financial Officer Pan Darong.

Siu Shawn is currently an executive director of the company and chairman of the group’s EV unit, appointed as the recent CEO. Vice President Qian Cheng was named CFO, the company said.

Evergrande said it was in discussion with Evergrande Property Services about the repayment schedule for the charges associated with the pledges. The company said the plan mainly sets off the relevant sums by transferring the group’s assets to the unit.

The developer added it would consider appointing an internal control consultant to make a comprehensive review of the internal control and risk management systems of the company given the initial findings of the probe and will be happening a report once the investigation is closed.