Former Anbang Insurance chief confesses guilt in $10bn fraud trial

One of China’s biggest financial fraud trials has taken place with the defendant, former Anbang Insurance chairman Wu Xiaohui, confessing his guilt and pleading for leniency in an apparent about-turn. The case centres on the allegation that Mr Xiaohui unlawfully used more than $10bn (CNY65.2bn) of investors’ money to fund a series of audacious acquisitions, including the purchase of the New York-based Waldorf Hotel, improper investments, debt repayment and personal use. The charges, which were laid out at the Shanghai No. 1 Intermediate People’s Court, allege financial fraud dating back as far as 2007. According to the court, the former chairman gained control of Anbang’s Property & Casualty Insurance unit in 2011 and ordered up fraudulent financial statements to bypass regulatory limits on sales levels for insurance and investment products. The profits from these short-term, high-yield products were then used to purchase a string of high-profile property assets, including the Waldorf Hotel in 2014, which thrust Anbang into the corporate spotlight. In addition, it is alleged that Mr Xiaohui wrongly transferred more than $6bn from sales of insurance policies to his own industrial company between 2007 and 2011 without declaring the transactions, in order to repay debt and to also bolster the P&C insurer’s capital base. According to the court, Mr Xiaohui had originally denied the accusations, stating that he was unaware that his behaviour amounted to a crime. However, by the end of the trial’s first day, he had reversed his position. In a statement issued by the court, the defendant “expressed deep self-reflection, understanding and regret for the crimes…thanked the justice system for its help, education and remedy and requested a light sentence”. The court stated it will issue a verdict at an unspecified later date. The case comes just a month after the Chinese government seized control of the insurer. This state takeover along with the trial has raised questions about Anbang’s ability to conduct any further business as well as the future of any current policyholders, although regulators have stated that they will undergo an equity restructuring of the business that will protect the rights of any current stakeholders. The Anbang case is just the latest act in what has been a significant clampdown on corruption and risky investments in China’s corporate sector. A number of leading executives and entrepreneurs have been detained by Chinese authorities, including financier Xiao Jianhua, who was arrested in early 2017 and CEFCF China Energy boss Ye Jianming, who was recently forced to step down. China’s insurance industry has also been subject to investigation. In April 2017, the former chairman of the China Insurance Regulatory Commission (CIRC), Xiang Junbo, was dismissed for alleged corruption and is facing criminal charges. And in March, the government announced plans to merge the CIRC with the China Banking Regulatory Commission to create a more powerful supervisory regime.

Former Anbang Insurance chief confesses guilt in $10bn fraud trial

Want to read this article?

Read Next

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Early construction project engagement critical to mitigate climate risks

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Early construction project engagement critical to mitigate climate risks

Want to read this article?

Read Next

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Early construction project engagement critical to mitigate climate risks

Related Articles