China Evergrande Group’s founder Hui Ka Yan has been sentenced to life in prison, bringing an end to one of the most dramatic rise and fall stories in China’s corporate history.
The disgraced property tycoon, once Asia’s second richest man, had turned Evergrande into a poster child of corporate excess during China’s long real estate boom. But after his empire came crashing down following a 2021 default, he was caught in a dragnet of official investigations that ultimately caused his downfall.Hui, who appeared visibly aged in court with greying hair, was sentenced alongside 56 others involved in Evergrande, including his sons Xu Zhijian and Xu Tenghe. His assets will be confiscated, and his companies were fined a combined 15.82 billion yuan ($2.4 billion).
The move draws a curtain on what for years was one of China’s great success stories. Hui had binged on debt during Evergrande’s expansion, turning it into the world’s most indebted developer as he transformed the property giant into a sprawling conglomerate.But Chinese authorities concluded that his rise was built on deception. They said Hui had perpetrated a massive financial fraud that included inflating assets and concealing liabilities.In April, Hui had pleaded guilty in a Chinese court to charges including illegally taking public deposits and fundraising fraud.“The amount involved in the crime is exceptionally large, the circumstances are particularly heinous, exceptionally heavy economic losses have been caused, and the harm to society is extremely grave,” a report from state media outlet Xinhua wrote, adding that Evergrande and Hui “must be severely punished in accordance with the law.”Evergrande and Hui were also found guilty of fraudulently issuing securities, violating information disclosure rules as well as bribery. Meanwhile, the founder was accused of embezzling company assets through dividend mechanisms.The sentence doesn’t bring an end to the numerous legal fights surrounding Evergrande. The company is now in liquidation, with an army of creditors inside and outside of China poring over its assets in the hopes of recovering some of their heavy losses.Rags to Riches
