Evergrande founder sentenced to life in prison for fraud

A court in Shenzhen, China, has sentenced Hui Ka Yan, founder of property developer Evergrande, to life imprisonment and confiscated all of his personal property.

The 67-year-old, once ranked by Forbes as China's richest person with a net worth of $42.5bn in 2017, pleaded guilty in April to eight charges. These included misuse of funds, fundraising fraud, illegally taking public deposits, illegally extending loans, fraudulently issuing securities and bribery.

Evergrande Group was fined 8.8bn yuan, while its property division was fined a further 7bn yuan, according to Chinese state media.

Years of financial fraud

The Shenzhen intermediate people's court found that between 2016 and 2021, Hui had violated state law through sustained, large-scale financial fraud aimed at inflating assets and concealing liabilities. The court said his conduct had severely disrupted the socialist market economy and caused exceptionally heavy economic losses.

More than 50 other individuals connected to Evergrande were also sentenced, receiving prison terms ranging from 20 months to 18 years.

Evergrande, delisted from the Hong Kong stock exchange last year, has defaulted on most of its roughly $300bn in liabilities. Its troubles trace back to 2020, when Beijing introduced rules capping the debt property firms could carry, upending a debt-driven sector that has historically accounted for between a quarter and a third of China's GDP.

Construction stalled on numerous developments as firms ran short of cash and demand weakened during the Covid-19 pandemic. A study published this year estimated the regulatory crackdown caused around $347bn in sunk costs across the Chinese economy.

Hui grew up in a poor family in rural Henan province, raised by his grandmother, before founding Evergrande in 1996. In 2018, he thanked the Chinese Communist party for everything he and his company had achieved.