China Evergrande Chief Hui Held in Special Detention Centre

Hui Ka Yan, founder and chief of China Evergrande Group – the giant developer at the centre of the country’s property sector crisis – is being held at a special detention centre in Shenzhen, sources have told Reuters.

Once Asia’s richest man, the 65-year-old businessman has not been seen since being arrested by Chinese authorities a year ago and his whereabouts were unknown.

Weighed down by a staggering debtload of about $300 billion, a Hong Kong court ordered in January that Evergrande be liquidated.

Then in March, China’s securities regulator found the group’s flagship unit had inflated its earnings by $78 billion, and committed securities fraud, which led to Hui being fined $6.6 million and barred from the securities market for life.

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Hui is not known to have been formally charged with any crimes yet and it is unclear how long he will remain in custody and whether he will be tried or set free.

Chinese authorities have detained many former high-flying business executives and some have remained in detention for years with little or no information about their fate.

The property tycoon was initially under house surveillance in Beijing after his arrest, according to one of the sources.

He was transferred to Shenzhen a few months ago to allow him to more easily communicate with top Evergrande executives, the second source said. Evergrande is headquartered in the neighbouring southern city of Guangzhou and its wealth management unit is based in Shenzhen.

The sources declined to be identified due to the sensitivity of the matter.

China’s Ministry of Public Security and the Shenzhen municipal government did not respond to requests for comment, nor did Hengda Real Estate, Evergrande’s main unit.

Evergrande’s liquidators, who have been appointed by a Hong Kong court, declined to comment.

Hui founded Evergrande in 1996, transforming it into China’s biggest property developer in terms of contracted sales, while aggressively taking on debt.

Over the past three years, the company has defaulted on most of its $300 billion liabilities as well as billions of dollars of wealth management product payments, and its troubles have been emblematic of China’s property sector woes that have weighed heavily on economic growth.

In March, a regulatory probe found an Evergrande unit had inflated revenue by 564 billion yuan ($78 billion) during 2019-2020 and issued bonds based on falsified statements.

UK accounting giant PricewaterhouseCoopers (PwC) is under investigation in Hong Kong for allegedly overlooking misconduct by collapsed developer China Evergrande for more than a decade. Indeed, its business in China has been hammered by the Evergrande fiasco.

Handover of unfinished apartments looming

The second source said Hui is in “good shape” and has access to medical care and good food at the special detention centre. Detainees at special detention centres typically receive better treatment than at ordinary detention centres.

Hui wrote a letter to senior Evergrande executives after being sent to the centre, urging them to resolve the non-payment of returns to investors in its wealth management products as soon as possible, the source added.

Evergrande’s wealth management unit announced plans in late 2021 to repay investors in its wealth management products. But in August last year, it said it was no longer able to make the monthly installments. Some of the unit’s staff were detained by the Shenzhen police a couple of weeks later.

The two sources also said Evergrande is close to handing over most homes that have been promised to buyers, adding that more than 70% of the construction is completed for those apartments.

They did not provide details on how many apartments that might mean. Evergrande had nearly 800 projects across the country as of 2022.