China Evergrande Group announced on Sept. 28 that its chairman and founder has been suspected of committing crimes, confirming reports that Hui Ka Yan was under police surveillance.
It stated that "relevant authorities" notified the company that Mr. Hui, also known as Xu Jiayin, is subject to “mandatory measures in accordance with the law due to suspicion of illegal crimes.”
Under its own laws, the Chinese regime can detain anyone in its designated secret facilities for up to half a year. The mandatory measures referenced in the company's statement can mean anything from detention to formal arrest.
Trading of Evergrande stock and two of its Hong Kong-listed units had been abruptly suspended on Sept. 28 without explanation amid growing concerns for the company's future. It was just the latest in a long saga of turmoil for the embattled real estate developer, once the second largest in China.
InvestigationsEvergrande reported billions in losses in 2021, as it became the world's most indebted property developer.
Mr. Hui was once China's wealthiest man, but his net worth has dropped by at least 90 percent.
In August, the company announced it was being investigated by China's Securities and Futures Commission.
Earlier this month, Chinese police detained members of Evergrande's financial staff and started a criminal investigation, according to a statement released by the company. A government statement explained that the staff members had been detained for "illegal fundraising."
“According to the current public information, Evergrande Wealth and its related parties illegally collected funds to form an internal fund pool, violated the contract, and mismatched product investment directions and deadlines, causing losses to investors,” it stated, adding that the detention would have “a positive significance in regulating and stabilizing the financial market.”
Tang Jingyuan, a China affairs commentator and Epoch Times contributor, said on Sept. 7 that Evergrande's exponential rise in the past two decades couldn't have come without a "strong backer" providing benefits, financing, "a lot of convenience," and political safety. Without such a backer, private enterprises are "strangled" under the Chinese Communist Party's (CCP's) economic system, he said.
Mr. Xi's crackdown on the property market began in 2016, tightening lending standards and putting hundreds of companies into bankruptcy. Despite this, Evergrande's Mr. Hui continued to borrow heavily, expanding the debt load. In 2020, more regulations were put forth, and the company could no longer borrow—it was trapped with its debt load.