Business
10:24, 10-May-2018
Anbang Insurance former head jailed for18 years for fraud
["china"]
Share
Copied
Wu Xiaohui, a former chairman of China's Anbang Insurance Group, was sentenced on Thursday to 18 years in prison for fundraising fraud and embezzlement of corporate funds.
The decision was announced by Shanghai No. 1 Municipal Intermediate People's Court.
Wu was also deprived of his political rights for four years and had 10.5 billion yuan (1.6 billion US dollars) worth of his property confiscated, according to the court ruling.
Anbang Insurance Group building. /VCG file photo
Anbang Insurance Group building. /VCG file photo
Wu was found guilty of defrauding Anbang of more than 65 billion yuan following a trial in March.
"(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," the court said.
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 1.95 billion dollars as well as other properties.
The authorities have also become increasingly alarmed by the murky web of subsidiaries and debt of conglomerates' and their potential threat to China's economy.
In February, the Chinese government took control of Anbang over concerns that the company was "at risk of being unable to pay its debts," which were mainly caused by its massive sales of short-term high-yield policies and risky outbound acquisitions.
Chinese regulators have been clamping down on excessive debt and "irrational" investments overseas to avoid systemic risk.
Acquisitive private companies such as Anbang, HNA, Fosun and Wanda spent billions on overseas purchases of everything from European football clubs to hotel chains and movie studios.
The four firms are referred to as "grey rhinos" – plodding financial beasts that could charge quickly, with damaging systemic results.
(With input from agencies)