Beijing (AFP) – The founder of Chinese property giant Evergrande has pleaded guilty to charges of fraud and bribery, a court said on Tuesday, the latest blow for what was once the country’s leading developer. Evergrande’s rise was propelled by decades of rapid urbanisation and rising living standards, but in 2020, its access to credit dramatically narrowed when the government introduced curbs on excessive borrowing and speculation. The company defaulted in 2021 after struggling to repay creditors.
Founder Xu Jiayin, known as Hui Ka Yan in Cantonese, was reportedly held by police in 2023, with Evergrande saying he had been subjected to measures “due to suspicion of illegal crimes”. A public hearing was held Monday and Tuesday on a case against Xu for “illegally absorbing public deposits, fundraising fraud, illegally issuing loans, illegally using funds, fraudulently issuing securities, disclosing important information in violation of regulations, embezzlement and (corporate) bribery”, a court statement said. “Xu Jiayin pleaded guilty and expressed remorse in court,” the statement from the Shenzhen Intermediate People’s Court in southern Guangdong province said, without elaborating further.
Evergrande Group and its real estate arm also stood trial this week. Evergrande is accused of a list of crimes including fraud, bribery and illegally issuing loans. Its real estate arm faces a charge of fraudulently issuing securities. The court said it would announce a verdict at a later date.
– Giant’s fall – Listed in Hong Kong in 2009, Evergrande surged to a peak market value of more than $50 billion under the stewardship of founder Xu. But fortunes reversed in 2020 under the new borrowing regulations from Beijing. Subsequent years saw a drawn-out struggle across the industry to complete construction projects as shares plunged and cash flows choked. A Hong Kong court issued a winding-up order in January 2024, ruling that the company had failed to come up with a suitable debt repayment plan. Last August, it delisted from the Hong Kong stock exchange.
Xu, 67, was once one of China’s richest billionaires and a member of China’s top political advisory body. His wealth and status have since plummeted, as Beijing has moved to crack down on corruption in the financial sector. Evergrande’s saga — and similar issues faced by other property giants including Country Garden and Vanke — have been closely followed by observers assessing the health of the world’s second-largest economy. The crisis has also dampened consumer sentiment at a time when Chinese officials are pushing for a new growth model driven more by domestic spending rather than investment. New home prices in China have been contracting for nearly three years.
© 2024 AFP
