Founder of China’s Evergrande pleads guilty to fraud
Founder of China’s Evergrande Pleads Guilty to Fraud
On 13 and 14 April, Hui Ka Yan, the founder of Evergrande, admitted guilt on several counts, including embezzlement of assets and corporate bribery, as reported by Chinese state media. The court will reveal its final ruling in the coming days. This admission has become a critical turning point in the aftermath of Evergrande’s financial collapse, which disrupted China’s property market and left investors and domestic banks in disarray.
Evergrande’s Debt Crisis and Mismanagement
The court proceedings highlighted how the company siphoned millions of dollars from pre-sale funds, which were supposed to finance property construction. Instead, these funds were redirected to new ventures, leaving hundreds of projects incomplete across the nation. Evergrande, once the largest real estate firm in China with a stock valuation exceeding $50bn, now stands as a symbol of the debt-driven crisis that began in 2021.
Hui expressed remorse during the public hearing, acknowledging the consequences of his actions.
Rise from Humble Beginnings to Economic Powerhouse
Hui Ka Yan, who also goes by Xu Jiayin, began his journey in rural China, raised by his grandmother before entering the property development industry. In 1996, he founded Evergrande, which later expanded into electric vehicles, food production, and even football, acquiring a majority stake in Guangzhou FC. At its peak, the company was the most indebted developer in the world, relying on over $300bn in borrowed money to sustain its operations.
Regulatory Shifts and Market Impact
Evergrande’s downfall was accelerated by Beijing’s 2020 regulations aimed at curbing property debt. These rules forced the company to sell properties at significant discounts to maintain cash flow. The collapse of Evergrande has been widely regarded as a catalyst for China’s prolonged property market downturn, which has had a lasting effect on economic growth.
Fine and Capital Market Ban
In March 2024, Hui was fined $6.5m and barred from participating in China’s capital markets for life due to his company’s $78bn revenue overstatement. His personal wealth had once made him Asia’s richest individual, with a fortune estimated at $42.5bn in 2017. The firm’s rapid expansion, fueled by China’s economic boom and heavy borrowing, eventually led to its dramatic decline.
Stock Market Decline and Delisting
Evergrande’s stock market value plummeted by 99% before it was delisted from the Hong Kong exchange in August 2025. At its height, the company operated 1,300 projects in 280 cities, but its empire crumbled under the weight of financial mismanagement and regulatory pressures.
