Ma Xingtian, former chairman of Kangmei Pharmaceutical, was sentenced to 12 years in prison and fined 
of 1.2 million yuan (US$188,300) for securities market manipulation, non-disclosure of important information and bribery. The Guangdong High People's Court rejected Ma's appeal and issued a final ruling on his case.
The court upheld the tribunal's November verdict, saying the evidence was sufficient, the conviction accurate, and the sentence appropriate. Kangmei, one of China's largest publicly traded pharmaceutical companies with 8,900 employees, was accused of financial reporting fraud involving 88.6 billion yuan of overreporting between 2016 and 2018. Regulators found that the company used fake bank receipts to inflate cash reserves, forged paperwork for non-existent business, and transferred company funds to related parties to trade its own shares.
In November, the lower court found the drugmaker, its executives and its auditors liable for financial fraud that caused losses of 2.46 billion yuan ($385 million) to 52,037 investors. Ma's wife Xu Dongjin – who was the former vice president and deputy general manager of Kangmei – and five independent directors who signed off on Kangmei's financial reports during the fraud period – were among the defendants and were found partly responsible for the compensation. The finding of directors' partial liability has triggered a wave of resignations by external board members of a dozen Chinese publicly traded companies.
From 2015 to 2018, Ma and other executives illegally raised a large amount of money and manipulated Kangmei's share price and trading volume by using multiple trading accounts under his control to buy and sell shares, the court. But he also organized, planned and directed the company's personnel to conduct financial fraud, disclose false business information to shareholders and the public, and fail to disclose more than 11.6 billion yuan of non-operating funds that were embezzled by controlling shareholders and related parties.
From 2005 to 2012, Ma paid bribes totaling $1.1 million to a number of government officials in exchange for benefits for the company, the court said. At least five officials involved in Ma's corruption case have already been removed from their positions and punished, including the former Communist Party secretary of Guangzhou city and the former head of the investor protection bureau at China Securities. Regulatory Commission.
Kangmei's losses in 2020 reached 27.7 billion yuan, nearly five times from a loss of 4.7 billion yuan a year earlier. In April, a creditor of Kangmei filed a bankruptcy restructuring lawsuit for the company, accusing Kangmei of failing to repay 49 million yuan. Last month, state-owned Guangzhou Pharmaceutical Holdings agreed to invest up to 6.5 billion yuan in a government-led Kangmei bailout.
