What’s New: The former chairman of Kangmei Pharmaceutical Co. Ltd. was taken into police custody after he was suspected of directing the drugmaker’s financial fraud.
The family of Ma Xingtian, former chairman and general manager of the company who is effectively the company's controlling shareholder, notified the company that the police took compulsory measures against Ma on suspicion of illegal disclosure of information and failure to disclose important information, Kangmei said Thursday night in a statement.
Compulsory measures usually include arrest, detention and residential surveillance. Ma is under residential surveillance, and it’s not clear what charges he faces, according to people close to Kangmei.
The background: Kangmei, one of the country’s biggest listed drugmakers, was accused of financial reporting fraud involving 88.6 billion yuan ($12.6 billion) of overstatements between 2016 and 2018. It was fined 600,000 yuan in May by top securities regulators for inflating revenues and fabricating bank deposits.
Regulators found that the company used fake bank deposit slips to inflate cash reserves, forged documents for nonexistent business activities and transferred company funds to related parties to trade in its own stock.
Administrative punishment will not be the end of Kangmei’s fraud case, an official at the China Securities Regulatory Commission (CSRC) told Caixin in May. The CSRC will continue to cooperate with the judicial authorities to investigate the case, and relevant personnel will be held criminally responsible, the official said.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)
Related: Kangmei Pharmaceutical Fined $84,600 for $12.6 Billion Fraud
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