Hui Ka Yan, the founder of Evergrande, has been sentenced to life in prison by a Chinese court for fraud and corruption. The sentence also includes the confiscation of his personal assets and the suspension of his political rights for life.
The court also sentenced 56 other individuals related to Evergrande, including Hui's two sons, and imposed fines on the company totaling approximately $2.4 billion. Evergrande's mainland subsidiary, Hengda Real Estate, will pay an additional $1.1 billion in fines.
Background on the Case
Hui had previously pleaded guilty to fundraising fraud and illegally collecting public deposits in April. The official Xinhua news agency stated that the severity of the sentence was due to the 'exceptionally large amount involved in the crime, the particularly odious circumstances, the exceptionally heavy economic losses, and the extremely serious harm to society.'
The company and its founder were also found guilty of fraudulent issuance of securities, violation of financial information disclosure rules, and corruption. Hui was accused of embezzling company assets through dividend mechanisms.
History of Evergrande
Hui founded Evergrande in 1996 and the company grew to become one of the largest real estate developers in China, with over 1,300 projects in 280 cities. However, the company's heavy debt financing and diversification into other industries, such as bottled water and professional football, ultimately led to its downfall.
The Chinese government's crackdown on the real estate sector in 2020 cut off Hui's access to traditional financing sources, leading to Evergrande's default in 2021 and subsequent liquidation proceedings.
