SHANGHAI • A Chinese court jailed the former high-flying head of troubled Anbang Insurance Group for 18 years yesterday for defrauding the company of more than US$10 billion (S$13.4 billion).
Wu Xiaohui was toppled as Anbang's head last year and China's insurance regulator announced an unprecedented takeover of the conglomerate in February, as the government moves to prevent heavily indebted large private companies from collapsing and posing a risk to the financial system.
Established in 2004, Anbang grew rapidly into a financial-services powerhouse, making waves in 2014 by buying New York's landmark Waldorf Astoria hotel for US$1.95 billion and other acquisitions.
In addition to the prison sentence, the Shanghai Municipal No. 1 Intermediate People's Court announced that it had ordered the seizure of 10.5 billion yuan (S$2.2 billion) worth of Wu's property and the suspension of his political rights for four years.
The court found him guilty of defrauding Anbang of more than 65 billion yuan following a trial in March. The funds were transferred to companies that Wu personally controlled to repay debts or for "personal expenditures", the judges said.
Between 2011 and last year, Wu instructed others to produce false earnings reports, disclose false information, fake fund injections and conceal insurance revenue to deceive regulators, the court said.
"(Wu) used bait by promising interest rates higher than the bank depository rate to illegally absorb large amounts of funds, which exceeded the scale the former insurance regulator approved," it said.
At Wu's March trial, the court was told that Anbang had sold investment products that exceeded allowable fund-raising amounts by a whopping 723.9 billion yuan.
The government's swoop on Anbang marked its most aggressive step yet to rein in politically connected conglomerates that grew rapidly and launched a wave of splashy multi-billion-dollar overseas investments fuelled by excessive debt. The government of Chinese President Xi Jinping, who has dramatically strengthened his grip on power recently, has made cleaning up financial risks a top national priority.
Wu's situation marks a startling fall from grace for a man who reportedly married a granddaughter of the late Chinese leader Deng Xiaoping - a sign that even political connections cannot guarantee immunity.
Anbang's takeover by the authorities is due to last a year but the government has said it could be extended if necessary as the authorities work to restructure the firm.
The highly unusual commandeering signalled deep official concern over the Beijing-based company's financial situation and appeared to confirm that toxic financial risks lurked in the world's second-largest economy.
AGENCE FRANCE-PRESSE
