Former Anbang Boss Admits Guilt in Illegally Raising $100 Billion
The former chairman of financial giant Anbang Insurance Group admitted to a court on Wednesday his involvement in a fundraising scheme that took in more than 723 billion yuan ($115.2 billion) from illicit insurance sales.
The one-day trial of Wu Xiaohui, Anbang’s former chairman, took place at Shanghai No. 1 Intermediate People’s Court, where he faced charges that included fundraising fraud and embezzlement, the court said on its Weibo social media account.
Early in the trial, Wu disputed the charges by pleading ignorance of the law, claiming he didn’t know his actions constituted crimes. But by the trial’s conclusion, he had admitted his guilt and asked for a lesser punishment, according to a court statement released in the evening.
The court will announce its verdict at a yet-undetermined date.
The Shanghai prosecutor’s office accused the 52-year-old Wu of fabricating information in the financial reports of Anbang’s property insurance subsidiary, Anbang Property and Casualty Insurance Co. Ltd., to illegally obtain regulatory approval to sell insurance products in 2011.
As of January 2017, Anbang Property had collected more than 723 billion yuan beyond its approved amount, prosecutors said. They accused Wu of transferring 160 billion yuan to other companies that he either owned or controlled and swindled customers out of more than 65 billion yuan — the amount that hadn’t been paid back to Anbang Property, the prosecutors said.
Prosecutors also accused Wu of injecting nearly 50 billion yuan of Anbang Property’s illegal insurance-premium income into the parent company in 2014. As of the end of 2014, the parent company had registered capital of 61.9 billion yuan, 98.22% of which belonged to 37 companies under Wu’s control, according to the prosecutors.
Prosecutors said Wu transferred 10 billion yuan of insurance-premium income from Anbang Property to other companies that he either owned or controlled when he served as vice chairman of Anbang Property. The funds were used to repay debts and inject capital into Anbang Property, prosecutors said.
After Wu learned of the investigation into the insurance group in March 2017, he ordered Anbang’s senior executives and key employees to flee China or take leave to avoid being investigated, prosecutors said. He also told his subordinates to change their computers and cellphones, delete emails, and destroy digital materials.
As China’s third-largest insurer with nearly 2 trillion yuan in assets, Anbang is one of the new generation of aggressive Chinese companies that embarked on a global buying spree a few years ago.
It has been in the eye of a regulatory storm raging against credit-fueled overseas spending sprees that have sparked concerns about the buildup of debt and its potential to destabilize the country’s financial system.
Last month, Anbang was taken over by China’s insurance regulator because it had struggled to repay its customers.
Contact reporter Lin Jinbing (email@example.com)
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