The dramatic downfall of China’s real estate giant has reached its legal climax as Hui Ka Yan, the billionaire founder of China Evergrande Group, was sentenced to life in prison for orchestrating one of the largest corporate financial frauds in history. The sentencing by a court in the southern city of Shenzhen brings a stern conclusion to the saga of a developer whose catastrophic collapse triggered a multi-year property crisis that continues to weigh on China's broader economy.
Along with the life sentence for Hui—also known as Xu Jiayin—the Shenzhen Intermediate People's Court slapped Evergrande’s corporate entities with fines totaling $2.3 billion. Evergrande Group received an 8.82 billion yuan ($1.31 billion) penalty, while its primary subsidiary, Evergrande Real Estate Group, was fined 7 billion yuan ($1.04 billion). Several other top executives were also handed prison sentences of up to 18 years on charges including fraud and the illegal absorption of public deposits.
Hui, who pleaded guilty in April to charges of fraud, bribery, and illegal deposit-taking following his arrest, was convicted of systematically inflating company assets, concealing vast liabilities, and abusing his position to misappropriate corporate funds. Investigations revealed that Evergrande manipulated its financial data by prematurely booking revenue from property developments before apartments were actually completed and delivered to buyers. Through these deceptive accounting tactics, the company overstated its revenues by roughly $80 billion across 2019 and 2020 alone.
Founded in 1996, Evergrande expanded aggressively during China's urban housing boom, eventually becoming the world's most heavily indebted property developer. However, its debt-fueled model unraveled in 2020 when Chinese authorities introduced strict limits on excessive borrowing in the real estate sector. The resulting liquidity crunch forced Evergrande to default on its obligations in 2021 with over $300 billion in liabilities, leading to a court order for its liquidation and sending shockwaves throughout the global market.