Anbang Insurance Group’s founder and former chairman Wu Xiaohui has been sentenced by a Chinese court to 18 years in prison for fraud and embezzlement, China’s official news agency Xinhua reported Thursday morning. The court also ruled that RMB 10.5 billion ($1.6 billion) of Wu’s property would be confiscated.
Wu was put on trial before the First Shanghai Intermediate People’s Court in late March on charges of fundraising fraud totalling RMB 65.2 billion ($10.24 billion) and embezzlement of RMB 10 billion in corporate funds from Anbang.
Wu was also convicted of having instructed others to submit fraudulent materials to the China Insurance Regulatory Commission (CIRC) starting in January 2011. The businessman was found to have submitted counterfeit information such as financial statements to the regulator so that it could skirt restrictions on selling high-interest investment-type insurance products as a means to raise capital.
Wu’s 18-year jail term includes a 15-year sentence for fraud and 10 years for abuse of power, according to Xinhua.
Wu, who married the granddaughter of China’s former leader Deng Xiaoping, was reportedly detained last June, after the company’s life insurance unit had been barred from selling new products due to alleged violations of insurance rules.
Conviction Follows Company Seizure
The sentence marks the latest chapter in a reversal of fortune for Wu, who became one of China’s highest profile business personalities after the insurer that he founded paid $1.95 billion to acquire the iconic Waldorf Astoria hotel in New York in late 2014.
Wu was removed from his role as Anbang’s chairman in late February after being charged by the court, while the CIRC (now the China Banking and Insurance Regulatory Commission) seized control of the company. The regulator is slated to control Anbang for a one-year period from February 25, according to a statement at the time, which indicated that Anbang’s business operations violated China’s insurance laws and jeopardised the firm’s solvency.
The insurance watchdog was reported to be overseeing Anbang’s daily operations as early as last July. After seizing the company, the government injected RMB 60.8 billion ($9.67 billion) into Anbang Insurance Group from the China Insurance Security Fund (CISF) in early April. The move was said to protect the interests of Anbang’s policyholders, as well as to ensure the company’s solvency and stable operations.
Offshore Shopping Binge Preceded Wu’s Downfall
Anbang is known internationally for its global acquisition spree, kicked off with the Waldorf Astoria deal. The acquisition streak saw the company pick up a total of $16 billion of properties, insurance firms and other assets in the span of 30 months.
Anbang continued to raise its profile by buying the Strategic Hotels & Resorts portfolio of high-end hospitality assets from Blackstone Group for $5.5 billion, marking the second-largest US acquisition by a Chinese buyer in 2016.
Anbang first emerged as a target of government scrutiny in March 2016, when it abruptly abandoned a $14 billion bid for US-based hospitality chain Starwood Hotels and Resorts. Reports in local media at the time of Anbang’s Starwood bid said that the CIRC was opposed to further overseas acquisition by the insurer, which was said to have already exceeded limits on foreign asset holdings.
The insurer said it is in the process of reviewing all of its overseas assets for sale, media reports this week show.