Evergrande Founder Hui Ka Yan Sentenced to Life

Hui Ka Yan, the founder of China’s Evergrande Group, was sentenced to life in prison by a Chinese court on Thursday. The court ordered the confiscation of all his personal property and fined Evergrande Group ¥8.82bn (£950m) and its subsidiary Hengda Real Estate ¥7bn.

Hui, 67, pleaded guilty in April to eight charges including misuse of funds, fundraising fraud, illegally taking public deposits, illegally extending loans, fraudulently issuing securities, and bribery. The convictions relate to a debt crisis at Evergrande that shook China’s economy when the government was trying to reduce reliance on the real estate sector.

Evergrande has defaulted on most of its $300bn in liabilities since 2021. The court stated that between 2016 and 2021, Hui employed methods such as sustained, large-scale financial fraud to inflate assets and conceal liabilities, causing exceptionally heavy economic losses.

More than 50 individuals linked to Evergrande were also sentenced on Thursday, with prison terms ranging from 20 months to 18 years. The troubles at Evergrande began in 2020 when the Chinese government introduced regulations limiting the amount of debt that property companies could hold.

The court said Hui and his businesses had caused 'serious disruption' to the country's property market, leading to substantial economic fallout. After years of aggressive expansion, the bursting of a Chinese property bubble meant the company struggled to service its debts, discounted properties heavily and diverted off-plan deposits to other projects before defaulting in 2021 under the weight of hundreds of billions of dollars of liabilities.

Hui's sons, Xu Zhijian and Xu Tenghe, were also handed jail terms. The crisis in the property sector was in part triggered by the central government tightening controls on credit over fears that huge borrowing by developers from state banks and local governments was endangering the whole financial system.