Evergrande’s billionaire chairman is now under police surveillance
It’s the latest setback for China’s embattled property giant, and the latest sign that the Chinese government is sharpening its regulatory ax.
The chairman of Evergrande has been placed under police control. Hui Ka Yan (许家印 Xǔ Jiāyìn) was taken away by Chinese police earlier in September and is being monitored at a designated location, according to Bloomberg, while Reuters reported that he has become “totally inaccessible” to those trying to reach him.
It’s not clear why Hui is under “residential surveillance,” a type of police action that falls short of official detention or arrest and does not mean Hui will be charged with a crime. But it comes as the latest setback to hit the world’s most indebted property developer.
Just a few years ago, Hui, the 64-year-old billionaire founder of Evergrande, was the poster child of China’s economic boom. Born into poverty in a rural village in Henan Province, Hui founded the company in 1996 in the southern city of Guangzhou. As his property empire expanded off of heavy borrowing to fuel its growth, so did his reputation for his glitzy lifestyle and penchant for wearing expensive Hermès belts.
But Evergrande’s once-glowing reputation began to change in 2021, as news of its financial problems spread. Its total liabilities now stand at more than $300 billion — roughly the size of Finland’s GDP — and the company has lost 99.9% of its value since peaking in October 2017. Hui’s wealth also drained down to $1.8 billion from $42 billion that same year, according to the Bloomberg Billionaires Index.
The company’s problems are only getting worse. Evergrande’s stocks closed down 19% today after plummeting as much as 25% earlier this week, shortly following the announcement that it would no longer be able to issue new notes. The news has roiled markets and cast further doubt on the future of its debt restructuring plan — the ticket to its survival. Some of the company’s major offshore creditors are reportedly planning to join a court petition to liquidate the company if a new debt plan doesn’t emerge by October 30.
It adds to the deepening turmoil in China’s debt-laden property sector, which has threatened Beijing’s efforts to revive its slowing economy and fanned concerns that its woes may spill over into the country’s banking system.
Hui’s placement under surveillance is also the latest signal that the Chinese government appears ready to ax its stumbling property zombie. Yesterday, Caixin reported that Chinese authorities detained Evergrande’s ex-CEO and CFO, Xià Hǎijūn 夏海钧 and Pān Dàróng 潘大荣, both of whom had resigned last year over their alleged involvement in a plan to funnel $2 billion into Evergrande’s coffers from one of its subsidiaries. On September 16, local police in Shenzhen, home of the company’s headquarters, announced that they detained some staff at Evergrande’s wealth management unit and had launched their first criminal investigation into the company since it defaulted on its debt nearly two years ago.
