Hui Ka Yan, the founder and once richest man in China of property developer China Evergrande Group, has been sentenced to life in prison for fraud and bribery in one of the biggest corporate collapses in history.
Hui Ka Yan, the chairman of Evergrande Property Services, was found guilty of fraud by a Chinese court on Thursday and sentenced to life in prison, along with a number of other defendants, including his two sons. Xu Tenghe and Xu Zhijian were also found guilty of crimes committed as part of the business dealings of their father.
He was arrested in 2023 while abroad after he had pleaded guilty in April 2023 to multiple counts brought against him as the former chairman of the now-bankrupt property developer including dishonesty offenses and the misuse of funds. He was at one stage the world’s richest man and was the number one ranked person in China’s rich list, compiled by China’s rich list magazine Fortune China, which ranked individuals by their estimated net worth.
Evergrande became the symbol of China’s massive property market financed by massive amounts of debt that eventually collapsed under the weight of Beijing’s tighter leverage rules. Its highly publicized default in 2021 triggered a massive systemic crisis in China’s entire property sector and got the attention of investors worldwide, from Hong Kong to New York.
The liquidation of Evergrande Group’s Hong Kong incorporated entity was ordered by a Hong Kong court in early 2024. As a consequence, Evergrande Group was delisted from the Hong Kong Stock Exchange. In the meantime, the Chinese mainland regulators and liquidators are trying to recover the large amounts of dividends and assets, which were distributed to Hui Ka Yan and his family members during the boom years.
In other news, China’s onshore bankruptcy proceedings against the mainland entity of Evergrande’s Hong Kong listed subsidiary have been launched this week and will complicate recovery for international creditors.
The severe sentence handed down to Hui Ka Yan, once China’s richest man, will be seen as a warning to the rest of the country’s business leaders that they will be held accountable for the debts that have so destabilized the economy. The developers are responsible for the mess left by Evergrande’s collapse, and for the hundreds of thousands of homebuyers left in the lurch – many still waiting in their half-finished apartments for the homes they had paid for in full.
China’s real estate market, once accounting for some 25% of China’s total GDP, continues to be a drag on the country’s broader economy with no end in sight to the downturn in home prices in major cities. China is prioritizing accountability over bailouts in the sector, believing that by putting the worst perpetrators of the crisis behind bars, they can restore confidence in the property market.
Hellbound and Down 