According to public information statistics, from Evergrande’s listing in 2009 up to before the crisis unfolded in 2020, Xu Jiayin’s nominal share alone amounted to 44.7 billion Yuan (US$6.27B). According to media reports at home and abroad, by 2023, Xu Jiayin will receive more than 50 billion Yuan in dividends (US$7.01B).
A veteran observer in corporate governance said that the Evergrande Group had previously accumulated more than 90 billion Yuan in dividends (US$12.64B). The offshore companies in the British Virgin Islands and the Cayman Islands, 100 percent controlled by Xu Jiayin and his wife Ding Yumei, received most of the dividends via Evergrande through a “red-chip” structure arrangement for listing in Hong Kong.
Before and during the crisis, Xu Jiayin transferred the dividends overseas, and through a technical divorce, the money was finally put into the pocket of Ding Yumei, his overseas ex-wife.
The fox guarding the Evergrande henhouse
Xu Jiayin progressed from being a controlling shareholder of Evergrande to becoming a creditor. In the past few years, Evergrande has issued a significant amount of overseas high-interest corporate bonds. The company’s overseas bonds amount to US$19 billion (140 billion Yuan) and can only be purchased by the Xu family and certain associates of Xu Jiayin. This way, a large amount of capital is converted into foreign exchange for interest payments, thereby circumventing China’s capital controls. This is an operational means of transferring money from China to overseas and hollowing out Evergrande.
For example, on November 6, 2018, Xu Jiayin subscribed to two U.S. dollar Evergrande bonds totaling US$1 billion, the 2022 notes issued in 2018 and 2023. The two U.S. dollar bonds have a maturity of four years and five years, with annual interest rates of up to 13 to 13.75 percent, with a total amount of US$1.235 billion, of which US$1 billion was subscribed by Xu Jiayin. These U.S. dollar bonds have the right to be redeemed, and if anything happens to Evergrande, Xu Jiayin will have priority to redeem first.
Mr. Xu’s son reportedly received a family trust fund worth up to 2.3 billion yuan (US$0.32B). This mechanism is also considered a way for him to transfer assets abroad.
While huge debts kept piling up, Xu Jiayin kept salting away the benefits
According to Evergrande’s 2021 mid-year report, the company owes 1 trillion yuan (US$0.14T) to material suppliers and builders, 0.22 trillion Yuan (US$0.03T)to buyers, and 0.24 trillion yuan (US$0.031T) to banks or other financial institutions. These creditors waited helplessly for the monies that should have been repaid to them, only to watch it flow into Xu Jiayin’s account in the United States, which was beyond their reach.
As of August 2023, there were 26 listed companies implicated by Evergrande, of which 20 have lost money, and six have experienced a sharp decline in performance; 26 companies publicly accrued bad debts of more than 35.3 billion Yuan (US$4.96B) to Evergrande. Among them, 10 companies like the Guangtian Group, Shanghai Electric, World Union Bank, and others have accrued bad debts of more than 1 billion Yuan (US$0.14B) to Evergrande.
Fallout with millions of wrecked lives
There will, as usual, be a massive cover-up, but according to several mainland media estimates, the number of unfinished buildings in Evergrande has reached 1.62 million units, involving 6 million owners. These owners have paid hundreds of thousands of dollars in down payments and will have to pay thousands of dollars a month for their loan repayments for the next 30 years. However, to live in their dream houses will not materialize.
In addition, Evergrande owes the domestic banks a colossal amount of money. These domestic banks have to pay off Evergrande’s debts on their behalf because these banks are the guarantors of the company’s domestic guarantee and foreign loan business. These debts inevitably will be passed onto the people.
A ravenous bloodsucker ‘hiding’ in plain sight
Under the “supervision” of the Central Committee of the CCP, the Central Commission for Discipline Inspection, the Guangdong Provincial Party Committee, the Provincial Commission for Discipline Inspection, the Guangzhou Municipal Party Committee, and the Municipal Commission for Discipline Inspection, Evergrande, led by Xu Jiayin, it seems, became a super bloodsucker that accumulated a massive 2.4 trillion Yuan of debts (US$0.34T) to enrich his own family and the Party cronies behind him.
As Secretary of the Evergrande Party Committee, Xu Jiayin played the communist playbook only too well: The Party is the leader and controller of everything in Evergrande. The company has many Party committees, discipline inspection, supervision, general Party branches, and thousands of Party members. However, the supervisory role played by all these control mechanisms was equal to, it seems, lining his own pockets and filling the Party trough.
The communist governmental and economic model
When asked why the CPSU (Communist Party of the Soviet Union) collapsed, Xi Jinping once concluded that an essential reason for the collapse was that the Party organizations at all levels had almost no role left. In China, the Party organizations at all levels seem to have a singular role: Hold the people down at gunpoint and keep them in perpetual fear; loot the people as much as possible; keep the Party sweet; fill as many killing fields as necessary, and stay in power at all costs. This is the communist economic model. It’s a parasite.
At this stage, we do not know how the case against Xu Jiayin will end. He may even get a promotion. The entire system is on trial. There can be no gloating over the demise of the mighty Evergrande Group, which is, it seems, in large part, due to the systemic corruption and looting by the supervisory parasites.
It’s obvious and evident that the so-called CCP elites do not believe in China. They are not even Chinese. This is a tragedy for the Chinese people, and they will be left paying the horrible price and forced to make yet another Great Leap Forward. The situation with Evergrande is an ominous reality check and may trigger the core meltdown of the company and the CCP. The world needs to be on the highest alert ever and monitor the safety of the Chinese people.
See Part 1 here
