2020-06-28

Nasdaq Listed Kingold Borrowed $2.8 Billion Backed by Gold-plated Copper Bars

Caixin: The Mystery of $2 Billion of Loans Backed by Fake Gold
Well, plenty, as at least some of 83 tons of gold bars used as loan collateral turned out to be nothing but gilded copper. That has left lenders holding the bag for the remaining 16 billion yuan of loans outstanding against the bogus bars. The loans were covered by 30 billion yuan of property insurance policies issued by state insurer PICC Property and Casualty Co. Ltd. (PICC P&C) and other smaller insurers.

The fake gold came to light in February when Dongguan Trust Co. Ltd. set out to liquidate Kingold collateral to cover defaulted debts. In late 2019 Kingold failed to repay investors in several trust products. Dongguan Trust said it discovered that the gleaming gold bars were actually gilded copper alloy.
It wasn't a surprise to locals:
“We knew for years that he doesn't have much gold ― all he has is copper,” said the source, who declined to be named.

Local financial institutions in Hubei have avoided doing business with Kingold, but they don’t want to offend him publicly, the source said.

“Almost none of Hubei’s local trust companies and banks has been involved in (Kingold’s) financing,” he said.

Public records showed that most of Kingold’s creditors are from outside Hubei.
Not great timing given the increased U.S. scrutiny on Chinese shares.

No comments:

Post a Comment