China: Life in prison for Evergrande's founder and a fine of more than $2 billion for the group for financial fraud

On Thursday, a Chinese court sentenced Evergrande founder Xu Jiayin to life in prison and fined the group more than $2 billion for crimes including fraud, five years after the default that triggered the country's real estate crisis.

Evergrande grew during the decades-long real estate boom, selling the dream of home ownership. Credit dried up when Beijing imposed limits on excessive debt and alleged speculation. In 2021, the company stopped paying its creditors.

Life imprisonment and confiscation of assets

The Shenzhen Intermediate People's Court, in Guangdong, fined the company and its real estate arm 15.82 billion yuan (about $2.4 billion). Xu, also known as Hui Ka Yan, was sentenced to life in prison for crimes including "large-scale financial fraud."

According to AFP, the court posted on WeChat: "Xu Jiayin was convicted of multiple crimes and fined; he was sentenced to life imprisonment, had his political rights revoked for life, and had all his personal assets confiscated."

According to the ruling, between 2016 and 2021, Evergrande and Xu, in his capacity as chairman, "violated national law by engaging in ongoing, large-scale financial fraud, as well as other practices, with the aim of inflating assets and concealing liabilities." It added that the parties "gained control of financial institutions" through bribes, without naming specific entities.

Xu, 67, pleaded guilty in April to charges that also include embezzlement and bribery.

The court held that the actions of Xu and Evergrande "seriously disrupted the order of the socialist market economy… and undermined the integrity of the official conduct of state personnel." It added: "The circumstances were particularly serious, as they resulted in particularly severe economic losses and caused particularly severe social harm."

56 convicted, including his two sons

Five other senior executives received prison terms ranging from six to 18 years for crimes including fraud. According to Xinhua, a total of 56 people were sentenced to prison—including Xu's two sons—with the shortest sentence being one year and ten months. The court also ordered the restitution of any remaining illicit gains.

Analysts cited by AFP are following the case as a barometer of the world's second-largest economy. Other major companies, such as Country Garden and Vanke, are grappling with similar problems. New home prices in China have been falling for three years.

The verdict marks the downfall of a man who was once one of China's wealthiest billionaires and a member of the Communist Party's highest advisory body. A photoshopped image was circulating on social media: a smiling Xu, with black hair and a gold Hermès belt, juxtaposed with Thursday's court photo, in which he appears gray-haired, serious, and escorted by two officers.