Hui Ka Yan Sentenced to Life as Evergrande Faces Hefty Fines

A Shenzhen court has sentenced Hui Ka Yan, founder of the Chinese real estate giant Evergrande, to life in prison. The court has also imposed fines totaling $2.3 billion on the company. This decision serves as a significant moment in Evergrande’s ongoing issues, having collapsed under more than $300 billion in liabilities in 2020. This collapse occurred following China’s regulatory crackdown on excessive borrowing in the real estate sector.

The crackdown resulted in a financial crunch for numerous developers and contributed to a prolonged downturn in the property market, affecting the broader economy. The Shenzhen Intermediate People’s Court found Hui, also known as Xu Jiayin, and Evergrande guilty of large-scale financial fraud. The company was accused of inflating its assets and hiding its liabilities.

The court issued a statement condemning Hui for abusing his position, orchestrating financial fraud, and misappropriating company assets. Additionally, several senior executives of Evergrande received prison sentences of up to 18 years for charges such as illegally taking public deposits and fraud.

Specifically, Evergrande group received a fine of 8.82 billion yuan ($1.31 billion), while Evergrande Real Estate Group was fined 7 billion yuan ($1.04 billion). Hui pleaded guilty to charges including illegal absorption of public deposits, fraud, and bribery following his arrest in China.

Established in 1996, China Evergrande defaulted on its debts in 2021, marking it as the world’s most indebted real estate developer before authorities ordered it to liquidate assets. Investigations by authorities in Hong Kong and mainland China revealed that Evergrande had manipulated financial data. This manipulation included prematurely recording revenue from property sales before the actual completion and delivery of apartments to buyers. According to officials, revenues were overstated by about $80 billion in 2019 and 2020.