|China takes over Anbang, prosecutes former boss for financial crimes|
|Author: SEEbiz / AFP|
|24th February 2018|
|BEIJING - China took over Anbang Insurance Group for a year on Friday and said its former chairman faces prosecution for economic crimes, in the government's most drastic move yet to rein in politically connected companies whose splashy overseas investments have fueled fears of a financial collapse.|
The highly unusual commandeering of Anbang signaled deep official concern over the Beijing-based company's financial situation and comes as the government looks to address spiraling debt in the world's second-largest economy. The China Insurance Regulatory Commission said Anbang, which has made a series of high-profile foreign acquisitions in recent years, had violated insurance regulations and operated in a way that may severely affect its solvency.
The announcement also clarified the situation of Anbang Chairman Wu Xiaohui, who was reported by Chinese media to have been detained last June. The insurance regulator confirmed Wu is being "prosecuted for economic crimes," a startling fall from grace for a man who reportedly married a granddaughter of late Chinese leader Deng Xiaoping. A statement by government prosecutors in Shanghai said Wu was suspected of fraudulent fundraising and "infringement of duties."
Acquisitive private companies such as Anbang, HNA, Fosun and Wanda have increasingly loomed in the government's crosshairs as it conducts a sweeping crackdown on potential financial risks. The four firms were in the vanguard of an officially encouraged surge in multi-billion-dollar overseas deals by Chinese firms to snatch up everything from European football clubs to hotel chains and movie studios, and were until recently considered untouchable because of their political connections.
However, authorities have become increasingly alarmed by the corporations' influence, their webs of subsidiaries and debt, and capacity to trip up the Chinese economy if they overextend. With worries rising about capital outflows and reckless accumulation of debt, the government has for more than a year implemented a host of ever-tightening measures to stem the flow of billions of dollars into what it has called irrational investments overseas.
Established in 2004, Anbang grew from a property insurer into a financial services powerhouse, hitting headlines in 2014 when it bought the landmark Waldorf Astoria in New York for a record $1.95 billion. Among other acquisitions, in 2015 it bought U.S. insurer Fidelity & Guaranty Life for $1.6 billion, Korean insurer Tong Yang Life for around $950 million and Dutch insurer Vivat for about $167 million.