Xu Jiayin, creator of the Chinese developer Evergrande, has been sentenced in the first instance by the Intermediate People's Court of Shenzhen to life imprisonment. The ruling also includes the withdrawal of his political rights for life and the confiscation of all his assets, after finding him guilty of several crimes, including embezzlement, fraud in fundraising, illegal disclosure of confidential information, and corporate bribery.
At the same time, Evergrande Group has received a fine of 8.82 billion yuan (1.125 billion euros) for various crimes, while Evergrande Real Estate has been punished with another fine of 7 billion yuan (893 million euros).
The court ruling concludes that Xu Jiayin, known internationally by the Cantonese version of his name, Hui Ka Yan, was "the effective controller of Evergrande Group," assuming ultimate responsibility for the management of the conglomerate. Under his command were Evergrande Real Estate, Evergrande Wealth, Evergrande Nanchang, and other subsidiaries.
Between 2016 and 2021, Evergrande Group, Evergrande Real Estate, and Xu Jiayin violated national legislation by continuously and widely falsifying financial statements, inflating asset values, and concealing liabilities. These practices resulted in crimes such as fraud in fundraising, fraudulent issuance of securities, and illegal disclosure of relevant information.
The sentence also details that Evergrande Group and Xu Jiayin irregularly obtained loans and insurance resources from financial entities to allocate them to Evergrande Group, through criminal behaviors such as corporate bribery, illegal loan issuance, and illicit use of funds. Additionally, the businessman allegedly took advantage of his position as president of Evergrande Real Estate to orchestrate financial frauds and divert company assets under the guise of dividends.
This Thursday, the Intermediate People's Court of Shenzhen also made public the first-instance ruling against five senior executives of Evergrande Group for illegal activities, including the embezzlement of public deposits and fraud in fundraising.
These executives have been found guilty of several crimes and sentenced to prison terms ranging from six to eighteen years, accompanied by economic fines or the confiscation of their properties.
The verdict against the founder of Evergrande is known a year after the shares of the Chinese real estate giant were definitively removed from the Hong Kong Stock Exchange. The shares had stopped trading in January 2024, after the liquidation of the company was ordered due to its heavy indebtedness.
Evergrande went public on the Hong Kong Stock Exchange in 2009 and reached its highest market value in 2017, when its shares reached 31.55 Hong Kong dollars. However, in 2021 the Chinese group warned of the risk of default due to its liquidity problems, after accumulating liabilities exceeding 300 billion dollars (257.98 billion euros).