Evergrande Founder Hui Ka Yan Sentenced to Life in Prison

Chinese property developer Hui Ka Yan, the founder of Evergrande real estate group, has received a life sentence. Additionally, the companies he leads have been fined $2.3 billion, as announced by a court in Shenzhen.

This decision represents a significant moment in Evergrande’s ongoing issues. The company collapsed under over $300 billion in liabilities when China tightened regulations on excessive borrowing within the real estate sector in 2020. This action resulted in challenges for many developers and affected the broader economy due to a downturn in the property market.

Financial Fraud Conviction

The Shenzhen Intermediate People’s Court found Hui and Evergrande guilty of engaging in large-scale financial fraud. They were accused of inflating the company’s assets and downplaying its liabilities. In its statement, the court stated Hui abused his position by orchestrating financial fraud and misappropriating company assets.

Residential buildings at China Evergrande Group’s City Plaza development in Beijing in 2023. Source: Andrea Verdelli / Bloomberg via Getty Images

Several senior executives from Evergrande also received prison sentences of up to 18 years, facing charges of illegal public deposits and other fraud-related offenses. Evergrande group was fined 8.82 billion yuan ($1.31 billion), and Evergrande Real Estate Group was penalized 7 billion yuan ($1.04 billion), according to the court’s statement.

Guilty Plea and Financial Misconduct

Hui pleaded guilty in April to charges such as illegal absorption of public deposits, fraud, and bribery after his arrest in China. Established in 1996, China Evergrande defaulted on its debts in 2021. It was noted as the world’s most heavily indebted real estate developer before orders were issued for asset liquidation.

Authorities in Hong Kong and mainland China previously reported that Evergrande manipulated its financial data through tactics like recording revenue from property sales before the apartments were completed and delivered to buyers. This resulted in an overstatement of revenues by about $80 billion during the years 2019 and 2020.