By Clare Jim and David Kirton
HONG KONG/SHENZHEN, China, Aug 20 (Reuters) – The founder of China Evergrande Group, the world’s most-indebted property developer, was sentenced to life in prison by a Chinese court on Thursday, five years after the firm’s collapse shook the nation’s economy and financial markets.
Hui Ka Yan, once Asia’s richest man, 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.
Evergrande, once China’s premier developer, has defaulted on most of its $300 billion in liabilities, its troubles symbolising a crisis in the property sector that has long dragged on the world’s second-biggest economy.
‘WHAT ABOUT OUR MONEY?’
The sentence in the southern city of Shenzhen, which included confiscating all of Hui’s personal property, ends his rags-to-riches story but is unlikely to bring much solace to Evergrande’s domestic and foreign creditors.
Evergrande’s liquidators declined to comment on the sentence. Reuters could not reach legal representatives for Hui, who had not been seen in public since Chinese authorities detained him in 2023, following Evergrande’s default.
In pictures released by the court, a grey-haired Hui, 67, stood flanked by two officers, wearing a long-sleeved, navy blue collared shirt, as the court read out his sentence.
“The criminal acts of Evergrande Group, Hengda Real Estate, and Hui Ka Yan … involved particularly huge amounts and egregious circumstances, caused particularly significant economic losses and caused particularly serious social harm, and should be severely punished according to law,” the court said in a statement.
Comments by Evergrande homeowners in a social media group included: “All ordinary citizens have paid the cost,” “Imprisonment is meant to protect him. If he comes out, his life is in jeopardy” and “What about our money?”
In addition to Hui’s sentence, the court said it had fined Evergrande 8.82 billion yuan ($1.31 billion) and its main subsidiary Hengda 7 billion yuan, and sentenced five other senior executives to fines and prison terms ranging from six to 18 years.
Altogether, 56 people linked to Evergrande, other than Hui, received sentences on Thursday, state media CCTV reported.
The company’s failure to repay billions of dollars in wealth-management products triggered protests that threatened social stability after ordinary investors, many of them on lower incomes, saw their holdings wiped out.
EVERGRANDE LIQUIDATION DRAGS ON FOR YEARS
A former steel technician raised by his grandmother in a rural village in central Henan province, Hui founded Evergrande in 1996 and turned it into China’s biggest property developer by contracted sales, aggressively taking on debt.
In 2017, Hui had a net worth of $45.3 billion, the highest in Asia, according to Forbes.
A Hong Kong court ordered Evergrande liquidated in 2024, and the Hong Kong Stock Exchange delisted it last year, bringing an end to a tumultuous boom-to-bust saga.
The liquidation process has moved at a glacial pace, according to its liquidators, with only about $255 million worth of assets sold as of last August, compared to creditors’ claims totalling $45 billion.
Outside mainland China, the liquidators are battling in court to freeze the offshore assets of Hui and his former spouse in a struggle to claw back $6 billion in dividends and remuneration paid to the founder and other former executives.
In 2024, China’s securities regulator fined Hui $6.6 million and barred him from the securities market for life, after finding Evergrande’s flagship unit had inflated earnings and committed securities fraud.
($1 = 6.7231 Chinese yuan renminbi)
(Reporting by Beijing newsroom and Clare Jim in Hong Kong; Additional reporting by David Kirton in Shenzhen; Editing by William Mallard)
Comments