2nd October 2023 – (Hong Kong) According to Wall Street Journal, Chinese authorities are investigating China Evergrande Group founder Hui Ka Yan for allegedly transferring company assets abroad while the heavily indebted developer struggles to complete unfinished housing projects.
Evergrande, labouring under over US$300 billion in liabilities, was once China’s second-largest property firm but has become the poster child for the industry’s financial woes. Its plans to restructure offshore debts have collapsed after its main onshore subsidiary came under investigation, scuttling a critical debt restructuring.
Now Beijing faces intensifying calls, both domestically and internationally, for more decisive intervention to restore stability in the vital property industry. While authorities have taken some ad hoc steps, economists argue comprehensive measures like targeted asset purchases, debt forgiveness and recapitalising distressed developers are required.
Evergrande’s disclosure of the probe into Hui came after the company revealed it could not issue new debt due to the investigation into its main domestic subsidiary. This has complicated Evergrande’s efforts to negotiate debt relief with offshore creditors. The company’s inability to complete numerous housing developments has already provoked public protests from homebuyers who have paid deposits but not received their properties.
Meanwhile, it was later reported that Hui’s second son, (Peter Xu), has also been detained. The whereabouts of Hui’s previously speculated “technically divorced” wife, Ding Yumei, are now unknown. According to some Chinese media reports, Ding Yumei left Hong Kong at the end of July and allegedly received billions of Chinese yuan as a dividend from the “technical divorce.”
According to reports from Hong Kong and mainland China media, Hui’s “former wife” Ding Yumei had been assisting relevant institutions in Hong Kong with Evergrande’s debt restructuring. In late July, informed sources revealed that Ding Yumei immediately bought a plane ticket to leave Hong Kong upon learning that some Mainland entrepreneurs were being controlled at the border due to Hui’s situation. As for her current whereabouts, no one knows.
Previously, there had been widespread news about the divorce between Ding Yumei and Hui, which was reportedly finalised last year. There were even rumours that Ding Yumei may have received billions of dollars in dividends from Evergrande through a “technical divorce.”