Evergrande founder sentenced to life in prison
Chinese property developer Hui Ka Yan, founder of the Evergrande real estate group, has been sentenced to life in prison, and the companies fined a total of $2.3 billion, a court in the southern city of Shenzhen said Thursday, reports BritPanorama.
This decision marks a significant chapter in Evergrande’s saga following its collapse under more than $300 billion in liabilities amid a crackdown by Chinese authorities on excessive borrowing in the real estate sector that began in 2020. This regulatory push triggered a crisis among many developers and contributed to a downturn in the property market that has significantly impacted the broader economy.
The Shenzhen Intermediate People’s Court convicted Hui, also known as Xu Jiayin, and Evergrande of engaging in extensive financial fraud, specifically for inflating the group’s assets and concealing its liabilities.
According to the court’s statement, Hui abused his position to orchestrate financial fraud and misappropriate company assets. Additionally, several other senior Evergrande executives received prison sentences of up to 18 years for charges that included illegally taking public deposits and fraud.
Evergrande group was fined 8.82 billion yuan ($1.31 billion) while Evergrande Real Estate Group faced a fine of 7 billion yuan ($1.04 billion), as detailed in the court statement.
Hui pleaded guilty in April to multiple charges including illegal absorption of public deposits, fraud, and bribery following his arrest in China. Founded in 1996, China Evergrande defaulted on its debts in 2021 and became the world’s most indebted real estate developer before being ordered to liquidate its assets.
Investigations by authorities in Hong Kong and mainland China revealed that Evergrande had manipulated its financial data through tactics such as prematurely booking revenues from property sales before the completion and delivery of apartments to buyers. This practice resulted in an overstatement of revenues by approximately $80 billion for the years 2019 and 2020.
As the repercussions of this case reverberate through the real estate sector, it underscores the ongoing challenges within China’s property market, where regulatory pressures continue to shape industry dynamics.
