Chinese property tycoon Hui Ka Yan, the founder of Evergrande Group, has been sentenced to life imprisonment, while two of the company’s entities were ordered to pay fines totaling $2.3 billion.
The Shenzhen Intermediate People’s Court announced the verdict on Thursday, bringing a major development to the long-running collapse of China’s heavily indebted property giant.
Evergrande fell into crisis after Chinese authorities began tightening restrictions on excessive borrowing in the property sector in 2020. The company later defaulted on its debts, leaving more than $300 billion in liabilities and contributing to a wider downturn in China’s real estate market.
The court found Hui, also known as Xu Jiayin, and Evergrande guilty of large-scale financial fraud. Prosecutors said the company inflated its financial position by overstating assets and hiding liabilities.
According to the court, Hui also abused his position to facilitate the fraud and improperly diverted company assets.
Several other former Evergrande executives were also convicted and handed prison sentences of up to 18 years. The charges included illegally collecting public deposits and committing fraud.
Evergrande Group was fined 8.82 billion yuan, equivalent to about $1.31 billion, while Evergrande Real Estate Group received a separate fine of 7 billion yuan, or approximately $1.04 billion.
Hui pleaded guilty in April to several charges, including the illegal absorption of public deposits, fraud and bribery, following his arrest in China.
Founded in 1996, Evergrande became one of China’s biggest property developers before defaulting on its debt in 2021. At the time, it was considered the world’s most indebted property developer. A Hong Kong court later ordered the company into liquidation.
Investigations by authorities in Hong Kong and mainland China found that Evergrande had manipulated its financial statements. One method involved recording revenue from property sales before homes had been completed and handed over to buyers.
Officials said the practice resulted in the company overstating its revenue by about $80 billion across 2019 and 2020.
Credit: npr
