Evergrande Real Estate, China's No.2 property developer by sales, has filed a HK police report related to a short-seller that accused it of fraud, bribery and financial irregularity, a source with direct knowledge of the situation disclosed Wednesday.

The company filed the report at Hong Kong's police headquarters, the source, who declined to be named because she was not authorized to speak to the media, was quoted by Reuters as saying. No other details on the report were available.

Hong Kong police declined to comment on the issue when reached by local media.

Chinese mainland media also reported Evergrande had filed a report Wednesday.

Lai Lixin, vice president and executive director of Evergrande Real Estate Group, went to the Hong Kong police with a lawyer on Wednesday, preparing to fight against Citron Research, which published a report on June 21 saying that the developer had become insolvent and presented fraudulent information to investors, Shanghai-based China Business reported.

Around $1 billion was wiped off Evergrande's market value on June 21 after news broke of the accusations by Citron Research.

Evergrande said Citron Research's allegations that it bribed government officials to buy land were "malicious slander."

Citron Research, which is run by Andrew Left from his Beverley Hills, California home, could not be reached outside normal business hours.

Citron Research targets companies with research exposing what it claims are financial irregularities and shorts the shares to profit when they decline in value.

American professional short-sellers have succeeded in recent years in questioning Chinese companies' listing overseas.

With several small businesses having been de-listed, these short-sellers are eyeing more reputed Chinese businesses, caixin.com reported yesterday.

"Evergrande's fightback is reasonable. If the information by Citron is fake, it is the company's responsibility to tell the truth," Jiang Guohua, deputy director of Guanghua School of Management of Peking University, was quoted by Caixin as saying. "There is no need to tolerate attacks, especially ungrounded attacks."  

Shares in Evergrande, which has China's largest land bank at 137 million square meters, closed up 3 percent at HK$4.09 Wednesday, beating a 0.1 percent drop in the benchmark Hang Seng Index. The stock has risen 3 percent since June 21.

Global Times - Agencies