Involved in financial fraud, Sirt and 7 former senior executives face fines exceeding 18 million yuan, and the company's stock will be designated as ST.

On March 27, the fertilizer company Si Erte (002538.SZ) announced that the company and related parties received the “Administrative Penalty and Market Ban Pre-Notification” issued by the Anhui Securities Regulatory Bureau, determining that the company’s 2021 and 2023 annual reports contained false records.

The Anhui Securities Regulatory Bureau intends to impose a fine of 18.6 million yuan on the company and seven responsible persons; among them, the then chairman Jin Guoqing and the then general manager Jin Zhenghui will each be fined 3 million yuan and subjected to a 5-year ban from the securities market.

The Shenzhen Stock Exchange will implement other risk warnings on the company’s stock, suspending trading for one day on March 30, and resuming trading on March 31, with the stock abbreviation changed to “ST Si Te,” and a daily price fluctuation limit of 5%.

However, this administrative penalty does not mean the end of the case. The father-son duo who once controlled Si Erte, Jin Guoqing and Jin Zhenghui, are also facing criminal cases for embezzling the company’s substantial assets.

The father and son held power for many years

Financial fraud occurred before their departure

Si Erte was originally a family business. At the time of its IPO in 2011, Jin Guoqing not only served as chairman but was also the chairman of the controlling shareholder Ningguo Agricultural Materials Company, effectively controlling Si Erte through Ningguo Agricultural Materials Company. Jin Guoqing’s daughter, Jin Pinghui, served as a director of Si Erte.

In 2013, Jin Guoqing’s son, Jin Zhenghui, also joined Si Erte, serving as a director and general manager.

According to resumes, Jin Guoqing was born in September 1947, has a bachelor’s degree, and is a senior political engineer. Jin Zhenghui was born in January 1974 and has a master’s degree. Jin Pinghui was born in November 1972 and holds an associate degree.

In December 2016, Ningguo Agricultural Materials Company transferred part of Si Erte’s equity to Guo Gou Industrial Holdings Co., Ltd., changing the company’s controlling shareholder to Guo Gou Industrial Holdings Co., Ltd. and the actual controller to Yuan Qihong. However, Jin Guoqing continued to serve as the chairman of the company, and Jin Zhenghui remained as a director and general manager until early 2022, when they both resigned.

Screenshot from the company’s announcement

In 2021, the company experienced financial fraud.

It was found that in 2021, Si Erte’s wholly-owned subsidiary Guizhou Lufa fabricated false tunnel excavation contracts and settlement documents, and signed false engineering construction contracts with multiple companies. This resulted in Si Erte artificially inflating its assets by 45.804 million yuan and its total profit by 45.804 million yuan.

The above engineering construction business was amortized annually through long-term deferred expenses during accounting, resulting in Si Erte artificially inflating its operating costs by 17.3485 million yuan in 2023 and reducing its total profit by 17.3485 million yuan.

In addition, Si Erte inflated its operating costs and operating income through false urea procurement and organic fertilizer sales, leading to a reduction in total profit of 9.4573 million yuan in 2021.

In total, the 2021 and 2023 annual reports disclosed by Si Erte contained false records. Among them, the total profit for 2021 was artificially inflated by 36.3467 million yuan, accounting for 6.76% of the disclosed total profit for that period; the total profit for 2023 was reduced by 17.3485 million yuan, accounting for 10.35% of the disclosed total profit for that period.

In response, the Anhui Securities Regulatory Bureau intends to issue a penalty:

Si Erte is ordered to correct its actions, receive a warning, and be fined 6 million yuan;

The then chairman Jin Guoqing and the then general manager and chief commander of Guizhou Lufa Jin Zhenghui will receive a warning and be fined 3 million yuan each. Due to the severity of the violations, Jin Guoqing and Jin Zhenghui are subject to a 5-year ban from the securities market;

The then vice president of Si Erte, Fang Jun, will receive a warning and a fine of 2 million yuan; the then vice president of Si Erte, Wen Jibing, the then financial director of Guizhou Lufa, and the then head of Si Erte’s audit department, Huang Xili, will each receive a warning and a fine of 1.5 million yuan; the then section chief of Si Erte’s office, Ma Lei, and the then head of Si Erte’s finance department, Yao Jing, will each receive a warning and a fine of 800,000 yuan.

Suspected embezzlement of duties

Criminal cases not yet concluded

In the announcement regarding the administrative penalty, Si Erte also pointed out that the false records in the annual report involved in this administrative penalty were mainly caused by the embezzlement and other criminal cases reported by the company, and the responsible personnel are also criminal suspects in these cases.

According to a previous announcement, by the end of 2023, Si Erte discovered during its self-examination that some management personnel were suspected of using their positions to embezzle substantial assets from the wholly-owned subsidiary Guizhou Lufa. After multiple interviews with relevant personnel, they refused to cooperate with the company’s self-examination and subsequently resigned.

In September 2025, Si Erte announced that Jin Zhenghui, Fang Jun, Huang Xili, Tian Minghua, Jin Guoqing, and others were suspected of embezzlement, and the case has been transferred to the procuratorate for examination and prosecution. It was disclosed that in addition to Si Erte possibly being suspected of unit crime, Si Erte’s identity in the case of “Jin Zhenghui and others suspected of embezzlement” is that of a victim.

Screenshot from the company’s announcement

In January 2026, Si Erte received the “Non-Prosecution Decision” delivered by the procuratorate.

After examination, it was found that the then chairman of Si Erte, Jin Guoqing (handled in another case), arranged for others to sign false urea procurement contracts to embezzle funds without any real goods transactions to access funds into a privately established “small fund.” Both companies also issued surplus VAT invoices to Si Erte.

Jin Guoqing and others created false sales records of organic fertilizers to embezzle funds to deceive government subsidies. From January 2020 to February 2022, they signed false urea procurement contracts with four companies to embezzle funds, and these four companies also issued surplus VAT invoices to Si Erte.

Si Erte did not intend to defraud the state tax and did not constitute a crime for issuing false VAT invoices, and the decision was made not to prosecute Si Erte. Si Erte will only participate as a victim in the criminal proceedings of the “Jin Zhenghui and others suspected of embezzlement” case.

In short, the criminal case against Si Erte has been dropped, but the criminal case against Jin Guoqing and others is not yet concluded.

The Anhui Securities Regulatory Bureau’s “Administrative Regulatory Measures Decision” also mentioned issues of fund occupation.

From 2016 to 2019, Si Erte improperly used a total of 115 million yuan from the funds raised through non-public offerings, resulting in a loss of 33.0146 million yuan during the improper use process, resulting in Ningguo Agricultural Materials Company’s non-operating use of listed company funds amounting to 36.8063 million yuan.

During the period when Si Erte’s subsidiary Xinhong Health managed Dongchen Health, Jin Guoqing concealed his shareholding in Dongchen Health, leading to inaccurate information disclosure. At the same time, Xinhong Health provided loans to Dongchen Health under the guise of management, resulting in Dongchen Health’s non-operating use of listed company funds amounting to 110 million yuan, of which 32 million yuan remains outstanding.

Edited by Tao Yueyang and Xiao Ziqi, comprehensive reports from 21st Century Business Herald, e Company, and China News Service.