Evergrande Founder Hui Ka Yan Sentenced to Life in Prison, Stock Plunges August 21

Xu Jiayin, founder of China Evergrande Group (3333.HK), received a life sentence on August 20 for orchestrating large-scale financial fraud between 2016 and 2021. The Shenzhen Intermediate People’s Court fined Evergrande and its real estate arm a combined 15.82 billion yuan (HK$17.8 billion). The verdict marks the end of Asia’s former richest man and a defining moment in China’s property market collapse that has cost investors over HK$300 billion.

Life sentence for fraud and embezzlement

The Shenzhen Intermediate People’s Court found Xu Jiayin guilty of large-scale financial fraud, embezzlement, corporate bribery, and illegally absorbing public deposits. Between 2016 and 2021, Xu and Evergrande inflated assets and concealed liabilities through continuous fraud. The court confiscated all his personal property and revoked his political rights for life. Xu pleaded guilty in April to all charges.

Massive fines and executive prison terms

Evergrande Group was fined 8.82 billion yuan (HK$9.96 billion), while its onshore operating unit Hengda Real Estate was fined 7 billion yuan (HK$7.89 billion). A total of 56 people received prison sentences, with senior executives facing terms of 6 to 18 years. Xu’s two sons, Xu Zhijian and Xu Tenghe, were among those convicted and sentenced. The combined fine of 15.82 billion yuan ranks among the largest corporate penalties ever imposed by a Chinese court in a criminal case.

Stock collapse reflects property crisis aftermath

Evergrande’s Hong Kong-listed stock (3333.HK) has plummeted 99.3% over five years, trading at HK$0.163 on August 21. The company defaulted in 2021 with over HK$2.1 trillion in liabilities. Meyka rates the stock a B grade with negative fundamentals: negative earnings per share of -6.63, negative book value, and operating cash flow of -0.93 per share. The stock has lost 90.1% over the past six months alone as creditors struggle to recover billions from the collapsed developer.

From Asia’s richest to life behind bars

Xu rose from rural poverty to build Evergrande into China’s largest property developer through aggressive borrowing and expansion. He was once ranked Asia’s richest man and served on the Communist Party’s top political advisory body. Authorities in Hong Kong and mainland China found that Evergrande manipulated financial data by prematurely booking revenue from property sales before completion, overstating revenues by roughly HK$560 billion over 2019 and 2020. His fall reflects the broader collapse of China’s property sector, which has triggered defaults by over 50 developers since 2021.

Final Thoughts

Xu Jiayin’s life sentence closes a chapter on one of China’s largest fraud cases, but leaves creditors and retail investors facing massive losses. With Evergrande’s stock down 99% and the company ordered to liquidate, recovery prospects remain bleak for the estimated HK$2 trillion in unpaid liabilities.

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