This article is from the Australian Property Journal archive
UNDER house arrest real estate billionaire Hui Ya Kan, founder of Chinese development giant Evergrande which is fighting for survival, is reportedly being investigated by Chinese authorities for attempting to transfer assets offshore while the company struggled to finish projects.
“People with knowledge of Beijing’s decision-making” said authorities are investigating the allegations, The Wall Street Journal has reported.
Evergrande, the world’s most indebted property developer, suspended trading on the Hong Kong Stock Exchange in recent days – shortly after a 17-month trading hiatus – after revelations that its billionaire Hui Ka Yan had been detained by police.
Hui was taken away by police earlier last month and placed under police monitoring, otherwise known as house arrest.
At the time it was unclear why he was detained, but Evergrande last Friday announced on the HKSE that its chairman has been detained “due to suspicion of illegal crimes”.
Under Chinese law, this kind of “police monitoring” cannot last more than six months, is not considered a formal detention or arrest and does not necessarily mean charges of a crime will be laid.
Hui has been ordered to surrender his passport and identification card and he is unable to leave his residence or communicate with others without approval.
The detainment of Hui comes after police in Shenzhen, in southern China, arrested several employees within Evergrande’s wealth management business, which had issued about $5.6 billion worth of wealth management products that had been bought by investors and average Evergrande employees.
Evergrande also revealed that its domestic arm, Hengda Real Estate Group is facing litigation due to its failure to repay debts. As of the end of August, Hengda Real Estate had 1,946 litigation cases which involved more than RMB30 million each, totalling RMB449.298 billion (approximately AU$95 billion).
Restructuring of Evergrande, which has US$327 billion in debts, begins to falter. Evergrande has said that it cannot issue new debts to restructure its offshore liabilities due to the investigation into Hengda Real Estate Group.
