BRIEF: Hongjiu Fruit chairman, board members probed for fraud

Chongqing Hongjiu Fruit Co. Ltd. (6689.HK) announced on Wednesday that its Chairman Deng Hongjiu and five board members are being investigated for various criminal offenses related to suspected loan fraud and the issuance of false value-added tax invoices.

Hongjiu said access to its main office in Chongqing’s Yubei district has been restricted since Jan. 6, disrupting normal operations. The company said information regarding the case remains limited, and it is unable to assess the impact or potential risks stemming from the allegations.

Hongjiu Fruit’s shares have been suspended since March 20 last year after it failed to publish its financial results on time. Its auditor, KPMG, subsequently resigned in April.

Previous reports indicated accounts receivable made up 92.4% of the company’s total assets as of June 2023. Media investigations revealed that Hongjiu Fruit allegedly signed large orders with non-existent companies, causing its accounts receivable to surge. Meanwhile, Chairman Deng reportedly pledged his company shares as collateral at least 13 times to raise $207.9 million in loans from financial institutions.

By Lee Shih Ta

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