FROM CHINA'S RICHEST MAN TO LIFE IN PRISON: EVERGRANDE AND HUI KA YAN
THE SENTENCING
On August 20, 2026, the Shenzhen Intermediate People's Court sentenced Hui Ka Yan, founder of China Evergrande Group, to life in prison, fining the company and its main subsidiary over $2 billion combined [1]. Hui pleaded guilty in April 2026 to eight charges, including embezzlement and bribery [2]. The court found large-scale fraud: inflated assets, concealed liabilities, illegal deposit-taking, fundraising fraud, and illegal disclosure [1].
Hui forfeited his assets and lost all political rights. Evergrande Group was fined 8.82 billion yuan and Evergrande Real Estate 7 billion yuan, among China's largest corporate criminal fines [1]. His sons and senior executives were also sentenced; over 50 people got 22-month to 18-year terms [3].
HUI KA YAN: BACKGROUND AND RISE
Hui (also Xu Jiayin) was born in 1958 into a rural Henan family, raised by his grandmother [4]. He passed China's college entrance exam in 1978, studied metallurgy at the Wuhan Institute of Iron and Steel, then worked in the steel industry [1]. He founded Evergrande in Guangzhou in 1996; it listed in Hong Kong in 2009, raising about $722 million for land purchases [5]. At his peak, Hui became one of Asia's wealthiest businessmen, with holdings in property, EVs, and football [1].
HOW THE BUSINESS MODEL WORKED
Evergrande's growth relied on a model it called "three highs, one low": high debt, leverage, and turnover, low cost. The cycle: borrow to buy land, pre-sell homes before completion, then use proceeds to repay lenders and fund the next project. Financing layers included bank loans, pre-sale proceeds, shadow-banking wealth products sold via state banks, public bonds (116 billion yuan in perpetuals by 2016), and pressure on staff to buy the firm's own products [6].
Revenue grew over 30% annually from 2010-2015, and the land bank hit 1 trillion yuan by 2017 [5]. Hui took over $7 billion in dividends since 2009, more than any of the 82 Chinese tycoons Bloomberg tracked then [7].
HOW THE DEBT BECAME UNSUSTAINABLE
The model needed land appreciation to outpace financing costs, which held in the upcycle but broke as the market cooled from 2019. By June 2021, leverage hit 86.3%, cash covered only 36% of short-term debt, and the firm carried about $89 billion in interest-bearing debt plus $103 billion in short-term payables [8]. Beijing's 2020 "three red lines" policy capped developer debt ratios; Evergrande breached all three, cutting off new bonds and exposing its insolvency [11].
THE FRAUD
Regulators found Evergrande's main unit inflated 2019 revenue by 214 billion yuan and 2020 revenue by 350 billion yuan via early sales booking, holding Hui directly responsible [9]. In March 2024 he was fined and banned from securities markets for life [10]. The 2026 verdict added illegal deposit-taking, fundraising fraud, and bribery [1].
TIMELINE
- 1996: Evergrande founded, Guangzhou [3]
- 2009: Lists in Hong Kong [3]
- 2020: "Three red lines" policy begins [11]
- Sep 2021: First missed offshore bond payments [12]
- Dec 9, 2021: Fitch declares restricted default [13]
- Jun 2022: Creditor files winding-up petition, HK [14]
- Aug 2023: Chapter 15 filing, New York [21]
- Sep 2023: Hui's police detention disclosed [15]
- Jan 2024: HK court orders liquidation; shares fall 21% [16]
- Mar 2024: Hui fined, banned from markets for life [10]
- Aug 2025: Delisted from Hong Kong exchange [17]
- Apr 2026: Hui pleads guilty to eight charges [2]
- Aug 20, 2026: Sentenced to life in prison [1]
MARKET AND INVESTMENT IMPACT
On liquidation day, shares plunged nearly 21% before suspension, yet the Hang Seng rose 0.9% as the outcome was widely expected [18]. The next day sentiment reversed: the Hang Seng fell 2.4%, the CSI 300 fell 1.78% [19]. Filings showed $25.4 billion owed to foreign creditors of over $300 billion total liabilities [18]. Over 90% of assets sit in mainland China, outside Hong Kong court jurisdiction [20]. Net losses hit $66.36 billion (2021) and $14.76 billion (2022) [21].
THE BROADER PROPERTY CRISIS
Evergrande's collapse was the most visible sign of a wider crisis spreading to Country Garden, Kaisa, Fantasia, Sunac, and other developers, and by late 2022 even resilient firms like Greenland Holding Group began defaulting [16].
As of mid-2026, new home prices in 70 major cities fell 3.5% year-on-year in May, with investment down 16.2% [22]. 2025 sales fell to 8.4 trillion yuan, half the 2021 peak; 26 of 27 developers reporting forecasts posted losses [23]. Housing is about 70% of urban household wealth in China; Goldman Sachs says the downturn cut two GDP points in 2024-2025 [24]. Local government debt has risen to an estimated $18.9 trillion amid collapsed land sales [25]. Beijing has responded with lower mortgage rates, eased purchase rules, and a loan "whitelist" approving over 7 trillion yuan for stalled projects, naming this its top 2026 priority [25]. Despite 500-plus rescue policies, Reuters-polled analysts expect a further 4% price fall in 2026 before stabilizing in 2027 [23].
SOURCES
www.moneyweb.co.za
