Anbang’s former Chairman Wu Xiaohui goes on trial
April 3, 2018 Category Finance, Weekly
Wu Xiaohui, who founded Anbang Group, has been put on trial in Shanghai, the first among China’s entrepreneurs to be prosecuted amid the government’s current crackdown on financial irregularities. The China Insurance Regulatory Commission (CIRC) removed him from his position as Chairman on February 23. He is on trial at the No 1 Intermediate People’s Court in Shanghai on charges of illegal fundraising, fraud, and embezzlement. Anbang had raised capital through selling wealth management insurance policies to 10.56 million policy holders, exceeding the regulator’s approved quota by CNY723.87 billion, according to the court. An estimated CNY65.25 billion of funds were diverted to Wu’s personal accounts for paying debt and for spending, the court said. Another CNY10 billion of insurance premium income was transferred to his personal company under Wu’s instructions in 2007 and 2011. Prosecutors said Wu owned and controlled more than 200 companies which were little-known to others and that he had increased his stake in Anbang with investments from these companies to have “absolute control” over the group. His stake in Anbang had reached 98.22% by the end of 2014 after more than 30 of his companies injected CNY49.9 billion in additional capital. Prosecutors said Wu ordered senior executives to go abroad and destroy information so as to cover up his crimes after he was told of a police investigation in March last year. “He severely destroyed the financial order and impacted the country’s financial safety,” prosecutors said.
In his defense, Wu said that he did not understand Chinese law, and that he did not know whether his actions constituted crimes that could be punishable. Moreover, he disputed that Anbang had breached the regulatory quota. A crime involving such financial magnitude could result in life imprisonment, said Benben Law Firm’s Attorney Liu Guohua in Guangzhou, who isn’t involved in Anbang’s case. A verdict will be announced later.
Anbang was one of the biggest sellers of wealth management products that were used to finance hostile takeovers and acquisitions. Anbang’s daily operations have been taken over by the China Banking and Insurance Regulatory Commission (CBIRC) for one year, which is seeking new investors. Anbang, founded in 2004, had grown from a seller of car insurance policies into one of China’s largest insurance providers, with more than CNY800 billion in assets in a little over a decade.
Anbang became famous in 2014 with the USD2 billion acquisition of the Waldorf Astoria hotel in New York from the Blackstone Group. Two years later, Anbang made an unsolicited USD14 billion bid to buy Starwood Hotels and Resorts Worldwide against the Marriott Group, which it finally lost. Between 2012 and 2016, Anbang had been involved in 14 acquisitions valued at USD25.22 billion.
- KURT VANDEPUTTE (UMICORE) APPOINTED CHAIRMAN OF THE BOARD OF THE FLANDERS-CHINA CHAMBER OF COMMERCE (FCCC)
- Webinar: “Knowing Your Chinese Partner” – May 26, 2021, 10 am – 12 am
- EMA starts rolling review of CoronaVac, WHO approves Sinopharm vaccine for emergency use
- The Global Times warns not to politicize the Comprehensive Agreement on Investment (CAI)
- Hainan to become biggest duty-free market in the world