Advertisement
China economy
BusinessCompanies

Explainer | How Kingold Jewelry’s fake gold bars slipped through scrutiny in one of China’s biggest loan scams

  • Kingold Jewelry allegedly passed off gilded copper bars as collateral for US$2.8 billion of loans
  • Bullion has to pass through state inspection and be stamped by accredited refiners before being eligible as loan collateral

Reading Time:4 minutes
Why you can trust SCMP
0
A sample of a Chinese gold bar. Photo: Handout
Daniel Ren
The scandal involving Nasdaq-listed Kingold Jewelry, one of China’s largest jewellery makers, has raised eyebrows in China’s business community as company officials and bankers feel the heat from the fallout.
The company was alleged to have used 83 tonnes of fake gold bars, or gilded copper, as collateral to secure 20 billion yuan (US$2.83 billion) of loans from onshore lenders, Caixin reported on June 29, describing it as one of the largest gold loan fraud cases China has ever seen.

The amount is equivalent to about 22 per cent of China’s annual gold output in 2019. If they were real, they would be worth about US$4.75 billion on the market today. However, Kingold last reported it held less than the reported amount of the yellow metal in its books.

The jeweller, based in Wuhan in central Hubei province, has denied any wrongdoing, according to Caixin. The company has not made any exchange filing regarding the accusation in the Caixin report. It also did not reply to emails and phone messages seeking comment.

Who are Kingold’s biggest lenders?

Kingold Jewelry indicated on May 14 that it would publish its 2019 annual accounts no later than June 29, citing audit delays caused by the coronavirus pandemic. The results are still not available, according to its 10-K filings in New York.

Based on its most-recent unaudited balance sheet on September 30, Kingold had US$1.42 billion of short-term loans owed to 13 lenders. In terms of exposure, Minsheng Trust had the largest with US$574.4 million. The next four biggest were Sichuan Trust (US$210.1 million), Anxin Trust (US$210.1 million), Dongguan Trust (US$140.1 million) and Chang’An Trust (US$112.3 million).
Advertisement