Founder of Failed Chinese Property Giant Guilty of Fraud

The dramatic fall of China Evergrande founder Hui Ka Yan culminated in a guilty plea in a Chinese courthouse on Tuesday.

The 67-year-old real estate tycoon pleaded guilty to charges of financial misconduct and bribery after a two-day trial in Shenzhen, the Wall Street Journal reported. He was also accused of misusing funds and embezzlement.

Hui stood trial alongside Evergrande and one of its affiliates, Hengda Real Estate. Charges against the trio included illegally accepting public deposits, fundraising and securities issuance fraud, illegal information disclosures and corporate bribery. The pleas of the companies were not immediately known.

The judgments against Hui, who showed remorse following the trial, will be determined at a later time.

Hui founded Evergrande in 1996, spending decades transforming the Guangdong-based company into the country’s largest residential developer by sales. But debt fueled much of the firm’s rise, bringing catastrophe several years ago.

Evergrande defaulted on an offshore dollar bond in December 2021, sending its fortunes into the tank. Between 2021 and 2022, the company lost $81 billion, resulting in it becoming the world’s most indebted developer and sparking a crisis that touched every part of China’s economy.

In 2023, Hui was briefly detained by police. He was personally fined $6.5 million and banned from China’s financial markets for life.

The following year, a Hong Kong judge declared that Evergrande needed to liquidate after years of struggles and an accumulation of more than $300 billion in debt. At that point, Evergrande had already filed for Chapter 15 bankruptcy protection in the United States in an attempt to restructure.

The firm’s collapse left more than 1,300 unfinished projects and hundreds of thousands of homebuyers waiting for apartments that may never be delivered.

Last summer, the Hong Kong Stock Exchange delisted Evergrande. Additionally, Hengda has been fined approximately $580 million for allegedly fraudulent financial statements.

— Holden Walter-Warner