Evergrande Founder Sentenced to Life as Company Fined Billions

Chinese property developer Hui Ka Yan, who established the Evergrande real estate group, received a life sentence in prison, with the companies fined $2.3 billion. This announcement came from a court in Shenzhen, highlighting a pivotal chapter in Evergrande’s troubled history. The developer collapsed under more than $300 billion in debt when Chinese authorities aimed to curb excessive borrowing in the sector in 2020. This situation led to a crisis among developers, adversely affecting the property market and the economy.

The Shenzhen Intermediate People’s Court found Hui, also known as Xu Jiayin, and Evergrande guilty of large-scale financial fraud. The convictions were related to inflating the group’s assets and hiding its liabilities. The court noted that Hui misused his position by orchestrating financial misconduct and diverting company resources for personal use.

Additionally, several other senior figures at Evergrande were sentenced to prison, with terms reaching up to 18 years. These charges included illegal collection of public deposits and fraudulent activities.

The court disclosed that Evergrande group was fined approximately 8.82 billion yuan ($1.31 billion), and Evergrande Real Estate Group faced a penalty of 7 billion yuan ($1.04 billion).

Hui admitted guilt in April, accepting charges such as illegally absorbing public deposits, committing fraud, and bribery following his arrest in China. Founded in 1996, China Evergrande defaulted on its obligations in 2021 and was forced to liquidate its assets as the world’s most indebted real estate enterprise.

Investigations by authorities in Hong Kong and mainland China revealed that Evergrande had manipulated its financial records. The company engaged in premature revenue recognition from property sales before the apartments were completed and delivered to buyers, overstating revenues by about $80 billion between 2019 and 2020.