Unable to fulfill its own refinancing plans, Evergrande Wealth may have crossed the line of criminality.
Photo by Fan Jianlei
By WANG Yuhan
Evergrande Financial Wealth Management, part of the Evergrande Group, is under police investigation for illegal fund pooling and breaches of contract, resulting in considerable losses for numerous investors. Several employees of the company have been detained.
On May 31, Evergrande Wealth announced that it had insufficient funds to make payments and was unable to meet the refund target of 2,000 yuan (US$270) per person. The target had already been reduced from the previous 8,000 yuan per person per month at the end of 2022. On August 31, another statement was issued, giving a failure to adequately dispose of asset disposal as the latest reason of the month.
Evergrande Wealth commenced operations in March 2016, primarily to serve the very richest of Evergrande property owners, for whom paltry amounts like 2,000 yuan, or even 8,000 yuan, go almost unnoticed.
Many of the recipients of Evergrande Wealth's investment advice are, in fact, Evergrande executives. These chosen few were the first to receive payments which have subsequently been clawed back.
Evergrande Wealth products worth around 90 billion yuan began to fail in August 2021. In September, XU Jiayin, founder of the property developer, promised prompt payment of all maturing wealth products, emphasizing fairness and justice in the process, but has been unable to follow through on his emotional displays.
Xu's Evergrande Group, acting as the guarantor for the wealth management division, is obligated to make up the shortfall, but can't. As of the end of last year, approximately 34 billion yuan in principal and interest remained unpaid.
Xu has not been taken into police custody.
Many of the recipients of Evergrande Wealth's investment advice are, in fact, Evergrande executives. These chosen few were the first to receive payments which have subsequently been clawed back.
Currently, the company offers three methods of refunds: cash, physical assets, or cheap properties. Investors can elect any combination of these methods.
