Hui Ka Yan, the founder of embattled Chinese property developer Evergrande, pleaded guilty this week to multiple charges including embezzlement of assets and corporate bribery, in a major milestone in the unraveling of one of China’s biggest corporate collapses.

Hui, 67, stood trial in Shenzhen alongside China Evergrande and its main mainland operating unit, Hengda Real Estate, according to reports from the BBC and The Wall Street Journal, which cited Chinese state media and court statements. The Shenzhen Intermediate People’s Court said it would issue its verdict at a later date.

According to the reports, Hui expressed remorse during the two-day public hearing on April 13 and 14. Prosecutors accused him and Evergrande of a broad range of offenses, including illegally accepting public deposits and granting loans, fundraising and securities issuance fraud, illegal information disclosures, corporate bribery, misuse of funds, and embezzlement. Hengda was separately accused of fraudulent issuance of securities. 

The court heard that Evergrande had taken millions of dollars in presale funding from homebuyers that was not used for construction, according to the BBC. Instead, the money was diverted into new projects, contributing to hundreds of unfinished homes across China. Once China’s largest residential developer by sales, Evergrande built its empire on heavy borrowing and eventually amassed liabilities of more than $300 billion, the reports said. At the time of its collapse, the company had around 1,300 projects across 280 cities in China.

Evergrande’s crisis deepened after Beijing introduced tighter property-sector borrowing rules in 2020. The company later defaulted on its international bonds in late 2021, helping trigger a prolonged slump in China’s property market that has weighed heavily on the broader economy, according to the news outlets. 

Hui, also known as Xu Jiayin, founded Evergrande in 1996 in Guangdong province and rose from rural poverty to become one of Asia’s richest men. Forbes estimated his fortune at $42.5 billion in 2017, according to the BBC. As Evergrande expanded, Hui invested in sectors including electric vehicles, hospitals, grain and oil, food and drinks, and soccer, including Guangzhou FC. The WSJ said he also joined China’s top political advisory body in 2008 and moved among the country’s business elite.

Authorities detained Hui in 2023 as they investigated suspected criminal offenses, the WSJ reported. In early 2024, a Hong Kong court ordered Evergrande to liquidate after the developer failed to agree a restructuring plan with creditors.

Later in 2024, Chinese regulators fined Hengda the equivalent of about $580 million for allegedly using fraudulent financial statements in bond issuance, the WSJ said. The BBC reported that Hui was fined $6.5 million in March 2024 and banned for life from China’s capital markets after authorities said Evergrande had overstated revenue by $78 billion.

Read more at the BBC

Read more at The Wall Street Journal