China Evergrande Group founder Hui Ka Yan has pleaded guilty in a court in Shenzhen to charges including misuse of funds, fundraising fraud and illegally taking public deposits, deepening the legal fallout from the collapse of the world’s most indebted property developer.
The court said Hui pleaded guilty and expressed remorse during trial proceedings held on Monday and Tuesday against him and Evergrande. The case adds to the mounting pressure surrounding a company that has been in default since 2021 on most of its $300 billion in liabilities, as well as billions of dollars in wealth management product payments.
Founder Faces Multiple Criminal Charges
The Shenzhen court said the charges against Hui include misuse of funds, fundraising fraud and illegally taking public deposits. It also said Hui and the company face additional charges of illegally extending loans, fraudulently issuing securities and bribery by units.
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The court did not say when verdicts would be delivered, stating only that judgments would be handed down at a later date. The liquidators of Evergrande declined to comment on the case.
Evergrande Crisis Casts Long Shadow
Evergrande’s collapse has become emblematic of the strains in China’s property sector. The company has defaulted since 2021 on most of its vast liabilities, with the financial stress extending beyond debt into unpaid wealth management product obligations worth billions of dollars.
The continuing fallout has weighed on confidence in a sector whose troubles have long dragged on economic growth. The legal case against Hui now unfolds against that broader backdrop of financial distress and regulatory scrutiny.
Regulatory Action Intensifies
Hui has not been seen in public since Chinese authorities detained him in 2023 following Evergrande’s default. Reuters said it was unable to seek comment from him.
In 2024, China’s securities regulator fined Hui $6.6 million and barred him from the securities market for life after finding that Evergrande’s flagship unit had inflated earnings and committed securities fraud. The Shenzhen Municipal Intermediate People’s Court said the founder and the company are also facing charges tied to loans, securities issuance and bribery, with the court yet to announce a date for its verdicts.
