Founder of China’s Evergrande pleads guilty to fraud

Founder of China’s Evergrande pleads guilty to fraud

Hui Ka Yan, the founder of Evergrande, a Chinese property developer mired in financial difficulties, has admitted guilt on several counts, including embezzlement and corporate bribery, as reported by a court statement. During the public hearing held in Shenzhen on 13 and 14 April, Hui expressed regret for his actions, according to Chinese state media. The court has yet to release its final ruling, stating it will do so at a future date.

The plea signifies a critical development in the aftermath of Evergrande’s collapse, which destabilized the country’s property market and left investors and domestic banks in a precarious position. Once the largest real estate firm in China, with a market value surpassing $50bn, Evergrande faced a debt-induced crisis in 2021 that led to the unraveling of its operations.

According to court records, the company misused billions in pre-sale funds from prospective buyers, failing to allocate them toward construction. These funds were instead redirected to new ventures, resulting in hundreds of properties left incomplete across the nation. Hui, who is also recognized as Xu Jiayin, began his journey in rural China, raised by his grandmother, before entering the property development industry and founding Evergrande in 1996.

Evergrande’s Downfall and Broader Economic Impact

The firm’s decline is frequently linked to the prolonged downturn in China’s property sector, which accelerated in 2021. At its peak, Evergrande operated approximately 1,300 projects in 280 cities, but its business model relied heavily on $300bn in borrowed capital. In 2020, regulatory changes in Beijing tightened control over property debt, forcing Evergrande to sell properties at steep discounts to sustain cash flow.

In March 2024, Hui received a $6.5m fine and was barred from China’s capital market indefinitely due to his company’s alleged overstatement of revenue by $78bn. Previously, in 2017, Hui was listed as Asia’s wealthiest individual with a net worth of $42.5bn, per Forbes’ rankings. His company’s rapid expansion was fueled by China’s economic growth, which enabled aggressive borrowing and diversification into electric vehicles, food production, and even football ownership, notably Guangzhou FC, which became a prominent team in the country.

Evergrande’s stock value plummeted by 99% before its shares were delisted from the Hong Kong exchange in August 2025, after over a decade on the market. The collapse has had lasting repercussions, reshaping the trajectory of China’s economic development and highlighting the risks of unchecked corporate borrowing.