China Evergrande： Xu Jiayin has been subject to coercive measures in accordance with the law on suspicion of illegal crimes
China Evergrande announced on the Hong Kong Stock Exchange on the evening of September 28th.The Company has been notified by the relevant authorities that Xu Jiayin, the director and chairperson of the board of directors of the company, is suspected of violating the law and has been subject to compulsory measures according to law. Trading in the shares of the Company will be suspended on the Stock Exchange from 9:00 am on September 28, 2023. Trading in the shares of the Company will continue to be suspended until further notice.
A criminal law expert told the 21st Century Business Herald reporter that the content of Evergrande Group’s announcement was very clear. According to Evergrande Group’s announcement, the company should have received a precise notice, and the notice classified Xu Jiayin as "suspected of violating the law and committing a crime", and was subject to coercive measures. It is common sense to guess that under the circumstances of notification by relevant departments, the coercive measures taken are likely to be different from the "residential surveillance" misreported by foreign media before.
The above-mentioned criminal legal experts said that in the context of the early investigation of Hengda Real Estate by the China Securities Regulatory Commission and the criminal coercive measures taken by the public security department against Hengda Fortune Du and other suspected criminals, the result of Xu Jiayin’s suspected illegal crime should not surprise too many people. Public opinion has paid more attention to "when" to take action. Judging from the current public information, the issues involved in him are likely to be related to multiple crimes, which are very complicated and may take quite some time to clarify.
A veteran observer in the field of corporate governance told the 21st Century Business Herald that Xu Jiayin had publicly declared slogans such as "No one is allowed to lie down" and "I can have nothing" in 2021, but based on various information and reports, Xu Jiayin and the company actually said one thing and did another, trying to "lie down" everywhere, throwing the burden of resolving various problems and contradictions to the society, and leaving a mess that is difficult to clean up. From this perspective, it is not too much for public opinion to criticize him.
The above-mentioned observers pointed out that on the cusp of this trend of great pressure from all parties, Xu Jiayin had already carried out a "silent technical divorce" with Ding Yumei while shouting slogans to deceive creditors. Due to the arrangement of Evergrande Group’s listing in Hong Kong through the "small red chip" structure, the offshore companies in the British Virgin Islands and the Cayman Islands controlled by Xu Jiayin and Ding Yumei respectively 100% of the previous 90 billion yuan in dividends of Evergrande Group received most of the dividends through China Evergrande (03333.HK), and transferred them overseas before and after the accident, and the operation through the "technical divorce" ended up in the pocket of Ding Yumei, the "foreign ex-wife".
A senior partner of an accounting firm familiar with cross-border restructuring pointed out to the 21st Century Business Herald reporter that at present, Evergrande Group’s overseas workout may face major variables due to the suspected illegal crimes of Xu Jiayin and some executives. But whether it is domestic or overseas, whether the reorganization is successful or liquidated, I believe there are sufficient legal channels for domestic and foreign creditors to safeguard their own rights and interests and pursue the responsibilities of Xu Jiayin and others. At the same time, the regulatory authorities are also likely to investigate Xu Jiayin and other executives according to law.