Phosphate fertilizer giant Sirt fined for financial fraud

This article is adapted from: Southern Rural News

“SiErTe” is a leading company in China’s phosphate compound fertilizer industry, with its core advantage being an integrated “mine-acid-fertilizer” business model.

Recently, “SiErTe” released multiple announcements covering, respectively, the “Preliminary Notice of Administrative Penalties and Market Bans” received by the company and relevant parties, the “Prompt Announcement Regarding the Implementation of Other Risk Warnings and the Stock Trading Suspension and Resumption of ‘SiErTe’ Shares,” and the “Decision on Administrative Regulatory Measures.”

The root cause of this controversy is a sustained two-year pattern of financial fraud. The Anhui Securities Regulatory Bureau determined that “SiErTe”’s 2021 and 2023 annual reports involved situations where profits were overstated and understated, with a combined amount exceeding RMB 50 million. Recently, the company has formally received the regulatory penalty notice: the company and 7 relevant responsible persons were fined in total RMB 18.6M, of which the then chairman Jin Guoqing and the then general manager Jin Zhenghui were both given the maximum fine of RMB 3 million each, and both were simultaneously subject to market ban measures, with a ban period of 5 years.

Former chairman allegedly lured employees into signing false confirmation documents

More severe than the administrative penalties are the criminal allegations faced by the relevant responsible persons. At the end of 2023, “SiErTe” conducted a self-audit and found that Jin Guoqing, Jin Zhenghui, and others allegedly embezzled (misappropriated) the company’s large amount of property in their positions, and the related cases have, in accordance with the law, been transferred to the procuratorate for review and prosecution. In January 2026, the procuratorate made a decision not to prosecute “SiErTe” company, clarifying that the company is the victim in the case, while the criminal cases involving Jin Guoqing and others are still undergoing further review.

Affected by the above administrative penalties and related matters, “SiErTe” shares were suspended for one day on March 30, resumed trading from March 31, and were also subject to other risk warnings (i.e., “wearing a cap”). The stock abbreviation was changed to “ST SiErTe.” After resumption, the limit on daily price increases and decreases was adjusted to 5%.

It is worth noting that before the suspension news was published, rumors had already circulated online about a “Letter to All Current, Resigned, and Retired Employees” issued by “SiErTe.” The letter directly targets Jin Guoqing, the former chairman, and Jin Zhenghui, the former general manager, along with their family members, who have been investigated. It claims that the two are taking advantage of employees’ “strong human-feeling and weak legal awareness” to诱骗 employees into signing false confirmation documents, with the aim of transforming the unlawful acts in which they personally misappropriated a large amount of funds from the company into a lawful-sounding “courtesy expense.”

It is reported that currently some current, resigned, and retired employees have already signed the related false documents under the alleged inducement, while some employees have clearly refused to sign and promptly reported the relevant situation to the company.

In the “Decision on Administrative Regulatory Measures” issued by the Anhui Securities Regulatory Bureau, it also disclosed multiple issues regarding the occupation of funds by “SiErTe.”

Between 2016 and 2019, “SiErTe”违规 used funds raised from a non-public issuance totaling RMB 115 million; during the违规 use, losses of RMB 33.0146 million were caused. At the same time, it also led to the non-operational occupation of上市公司 funds by Ningguo Agricultural Materials Co., Ltd., amounting to RMB 36.8063 million.

In addition, during the period when “XinHongDa Health”—a subsidiary of “SiErTe”—was entrusted to manage “DongChen Health,” Jin Guoqing concealed relevant information regarding his holding of shares in “DongChen Health,” which resulted in inaccurate information disclosure by the company. Meanwhile, “XinHongDa Health,” under the guise of being a entrusted administrator, provided loans to “DongChen Health,” leading to “DongChen Health” non-operationally occupying上市公司 funds of RMB 110 million. As of now, the amount of occupied funds has not yet been fully repaid, with RMB 32 million still outstanding.

On one side, regulatory penalty notices have been formally implemented; on the other, a major criminal case has not yet been concluded. Combined with the internal contradictions reflected by the “letter to employees,” it is clear that the crisis faced by “SiErTe” has not ended.

Overstated and understated profits cumulatively exceeding RMB 50 million

“SiErTe” was originally a company controlled by the Jin Guoqing family. After the change of the company’s controlling shareholder in 2016, Jin Guoqing and Jin Zhenghui and their family members continued to serve as senior management of the company until they stepped down at the beginning of 2022.

According to the Anhui Securities Regulatory Bureau’s findings, in 2021, “SiErTe” wholly-owned subsidiary Guizhou Lufa caused “SiErTe” to overstate assets by RMB 45.8M and simultaneously overstate total profit by RMB 45.8M in 2021 by preparing false tunnel boring cart excavation contracts and settlement sheets, and at the same time signing false engineering construction contracts with multiple companies, among other methods.

When accounting for the above-mentioned false engineering construction business, it was amortized over multiple years using the long-term prepaid expenses account, which in turn caused “SiErTe” to overstate operating costs by RMB 17.35M in 2023, corresponding to an overstatement (profit understatement) of total profit of RMB 17.35M.

Besides that, “SiErTe” also fabricated transactions for urea procurement and organic fertilizer sales, thereby overstating operating costs and operating revenue, ultimately resulting in an understatement of profit totaling RMB 9.46M in 2021.

The two categories of违规 conduct combined resulted in “SiErTe”’s 2021 and 2023 annual reports containing false records. Among them, for 2021, total overstated profits were RMB 36.35M, accounting for 6.76% of the total profit disclosed for that period; for 2023, total understated profits were RMB 17.35M, accounting for 10.35% of the total profit disclosed for that period.

“SiErTe”’s relevant announcements clearly state that the false records in the annual report involved in this administrative penalty mainly stem from criminal cases such as embezzlement of job-related duties filed by the company earlier. The relevant responsible persons are all suspects in that criminal case.

According to information disclosed in the company’s earlier announcements, at the end of 2023, during its self-audit, “SiErTe” discovered that some management personnel were suspected of embezzling assets of its subsidiary Guizhou Lufa. The relevant personnel refused to cooperate with the self-audit and voluntarily resigned. In September 2025, Jin Zhenghui, Jin Guoqing, and others were, in accordance with the law, transferred to the procuratorate for review and prosecution due to suspected crimes of embezzlement of job-related duties. As the victim, “SiErTe” participated in relevant procedures of the case. In January 2026, after review, the procuratorate found that Jin Guoqing privately set up a “small treasury” to siphon company funds, arranged for relevant personnel to sign false procurement contracts, and obtained falsely issued VAT special invoices. However, because “SiErTe” did not have the purpose of tax fraud, his conduct did not constitute a crime, and it decided not to prosecute “SiErTe.” At present, “SiErTe” only participates in the subsequent trial work in related criminal proceedings involving Jin Guoqing and others in its capacity as the victim.

“SiErTe,” the full name of which is Anhui Province SiErTe Phosphate Fertilizer Co., Ltd., is a leading company in China’s phosphate compound fertilizer industry, with its core advantage being integrated “mine-acid-fertilizer” operations. “SiErTe”’s main business is phosphate compound fertilizer. Its products cover monoammonium phosphate, diammonium phosphate, high-tower compound fertilizer, and more. The company has established four production bases in places such as Ningguo, Anhui Province and Kaiyang, Guizhou Province. In the first three quarters of 2025, the company’s operating revenue was RMB 3.23B, and its net profit attributable to shareholders was RMB 155 million.

□ Compiled report by Southern Rural News