Beijing: Xu Jiayin, former chairman of China’s property developer Evergrande Group, whose collapse has caused a massive crisis in the Chinese property market, pleaded guilty to charges of embezzlement of corporate assets and corporate bribery.
The Shenzhen Intermediate People’s Court, which has held a public trial since Monday on charges, said Xu pleaded guilty and expressed remorse.
Xu, also known as Hui Ka Yan, was charged with offences including illegally absorbing public deposits, fraudulent fundraising, and illegally granting loans, the court said Tuesday.
Prosecutors also accused Evergrande Group and Evergrande Real Estate Group of multiple offences, including fraudulent issuance of securities.
The verdict will be announced at a later date, state-run Xinhua news agency reported.
The charges against Hui and Evergrande also included illegally absorbing public deposits, fundraising fraud, illegal loan issuance, fraudulent issuance of securities and unlawful disclosure of material information.
Evergrande has the dubious honour of being the world’s most indebted developer, based on its total liabilities of USD 332 billion in 2023.
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Its collapse has plunged China’s property sector, the mainstay of its economy, into an irreversible crisis, prompting the government to periodically intervene to keep the housing market from complete collapse.
After its collapse, the property crisis crashed all over China, and not recovered fully.
The High Court in Hong Kong in January 2024 ordered its liquidation.
In March 2024, the China Securities Regulatory Commission penalised the insolvent developer 4.2 billion yuan (USD 616 million), saying Evergrande inflated its sales in the years preceding its eventual collapse.
It also fined Hui 47 million yuan (USD 6.71 million) and barred him for life from accessing the capital markets.
Hui was born in a village in Gaoxian, a town of fewer than 50,000 residents in central China’s Henan province.
Raised by his paternal grandmother, he studied metallurgy at what was then the Wuhan Institute of Iron and Steel before finding work in a local steel mill, the Hong Kong-based South China Morning Post reported.
Hui quit the job in 1992 and headed for southern China and founded Evergrande in Guangzhou, and focused on building affordable homes for the mass market.
He borrowed to build at low cost, selling his flats off-plan and using the high turnover to generate cash flow to fund growth.
By the time Evergrande turned 21 in 2017, it was the world’s biggest property developer by sales, surpassing its long-time, crosstown rival Vanke.
In 2020, in an attempt to deleverage and improve the financial health of the property sector, the Chinese government introduced the so-called three red lines policy, which forced developers to reduce their outstanding debt, among other requirements.
The policy led to a liquidity crisis for Evergrande and other developers, the Post report said.
