On 6 Dec 2021 CRRC Corporation Limited(中国中车股份有限公司, CRRC), an enterprise controlled by the State Council of the People's Republic of China (CCP regime) under the CCP's leadership, published its 2021 3Q financial statements according to which operating cashflow both in 2021 and 2020, net negative, was unable to be used to pay debt interest and dividend. CCP regime and its associates are related parties to CRRC.
The interest was incurred on the loans mainly from state-owned banks. As of 31 December 2020, among other things, it obtained credit facility respectively from China Development Bank, Bank of China, China Exim Bank and China Construction Bank for 25 billion, 18.25 billion, 13.4 billion and 13 billion, all of which share the same control of CCP regime as CRRC.
But CRRC failed to disclose the credit facility transactions as with related parties and corresponding pricing policies.
In 2020, CRRC had acquired land use rights accounted for as intangible assets and failed to account for land use rights as right of use assets. In China, state-owned entities often acquired land use rights at low price from CCP regime. But CRRC failed to disclose land use acquisition transaction as related party transactions and corresponding pricing policies. According to land use tax regulation of China, CRRC used at least 8.8 million square meters land.
China State Railway Group Co., Ltd, a state-owned enterprise, is the major customer of CRRC but failed to be disclosed as a related party and corresponding information of related party transactions failed to be disclosed.
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