China Evergrande Soared on the Property Boom. Here’s Why It Crashed.
In January, more than 100 financial sleuths were dispatched to the Guangzhou headquarters of China Evergrande Group, a real estate giant that had defaulted a year earlier under $300 billion of debt. Its longtime auditor had just resigned, and a nation of home buyers had directed its ire at Evergrande.Police on watch for protesters stood guard outside the building, and the new team of auditors were issued permits to get in. After six months of work, the auditors reported that Evergrande had lost $81 billion over the prior two years, vastly more than expected.But they still had questions. Some records they had requested from Evergrande were incomplete. Numbers were missing. Important accounting errors or misstatements may have gone undetected. How had things at Evergrande — once one of China...