Just one day later, rumors were shown to be true. Xu Jiayin, the chairman of the board and Communist Party secretary of the Evergrande Group, was reportedly subjected to coercive measures because of alleged illegal activities, according to a statement made last night (Sept. 28) by China Evergrande Group (03333). The numerous rumors come to an end as a result. Before the market opened yesterday, the three Hong Kong-listed companies of the Evergrande Group declared a trading stop, suspending trade once more until further notice just over a month after it had resumed.
The current announcement does not disclose further details about Xu Jiayin's situation. However, according to the report, the authorities have issued a clear notice to Evergrande, qualifying Xu Jiayin as "suspected of illegal activities".
Coercive measures are any action that imposes some form of constraint on a suspect, such as apprehending someone. Such measures allow the police and prosecutor to investigate or gather evidence that a crime has been committed or planned.
According to sources from Chinese media, Beijing Anjian Law Firm attorney Zhou Zhaocheng predicted that if Xu Jiayin is put under criminal custody, he will probably be in a detention center. The maximum period of criminal detention shall not exceed 37 days, and the term of custody following an arrest should typically not go longer than two months. During this phase, a lawyer may be invited for a visit. The public security agencies may switch from coercive measures to release on bail pending trial if there is proof of a serious illness or inability to care for oneself or if the requirements for such release are satisfied.
"As for the specific crimes Xu Jiayin is suspected of, it is still unclear. If Xu Jiayin's crimes have caused losses to Evergrande and investors, in addition to facing criminal liability, he cannot escape civil compensation responsibility," said Zhou Zhaocheng.
Following the statement, Xu Jiayin's alleged involvement in unlawful operations has been confirmed, and coercive steps have been launched against him, according to Beijing Jinsu Law Firm Director Lawyer Wang Yuchen. Because they have initiated coercive action against Xu Jiayin, this suggests that the public security authorities have already amassed comparatively significant proof of his claimed offenses. He said that Xu Jiayin's forceful tactics are probably only the beginning and that other substantial steps may come.
Will Xu Jiayin's case affect Evergrande's operations, debt repayment, and property delivery? Lawyer Wang Yuchen pointed out, "Xu Jiayin being subjected to coercive measures does not necessarily mean Evergrande will go bankrupt entirely. Evergrande has many subsidiaries nationwide, and each company is relatively independent. Therefore, buyers who have purchased Evergrande's properties and investors who have invested in Evergrande need to monitor the company's future direction closely but should not overly worry. Since the government has taken action involving so many ordinary people, there should ultimately be appropriate solutions."
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