China set to put tycoon seized in Hong Kong on trial, says Wall Street Journal

Prosecutors in Shanghai plan to charge Xiao Jianhua with illegal collection of public deposits. PHOTO: REUTERS

SHANGHAI (BLOOMBERG) - A Chinese-Canadian tycoon who was seized at a Hong Kong hotel five years ago and has lost much of his sprawling business empire to the Chinese government is about to go on trial, the Wall Street Journal reported.

Prosecutors in Shanghai plan to charge Xiao Jianhua with illegal collection of public deposits, the newspaper reported, citing people familiar with the situation. Hearings could start this month, according to the article.

Xiao has told his family to have faith "in the Chinese government and Chinese law", the Journal quoted his older brother, Mr Xiao Xinhua, as saying. The case was "very complicated and full of drama", he added in the report published late Thursday (June 9).

Xiao Jianhua has been missing since early 2017 when he was taken from his room at the Four Seasons in Hong Kong, where he had been staying for several years after fleeing China.

China's central bank later identified Tomorrow Group, the investment conglomerate owned by Xiao as one of several "financial holding companies" that should be scrutinised in their ownership structure, related transactions and source of funding.

In mid-2020, regulators in China assumed control of nine financial firms linked to Xiao, among them Huaxia Life Insurance, Tianan Life Insurance, Tianan Property Insurance, and New Times Trust.

The government's move came as the authorities stepped up efforts to maintain financial stability, in part because Covid-19 was harming economic growth and sour loans were piling up.

Before his disappearance, Xiao - a student leader of the 1989 Tiananmen pro-democracy protests - was part of a fortune estimated at almost US$6 billion, said The Hurun Report of China's richest people.

The charge of illegally collecting deposits usually involves unlicensed institutions or individuals gathering funds from the public.

China's criminal law provides for jail terms of less than three years to more than a decade for convictions under the offence, though in 2013 a court in the eastern city of Wenzhou handed a woman a suspended death sentence because she "cheated investors" out of more than 570 million yuan.

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