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 fuelled fears of a financial collapse.
The highly unusual commandeering of Anbang signalled deep official concern over the Beijing-based company’s financial situation and comes as the government looks to address spiralling 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 fate of Anbang’s chairman Wu Xiaohui, who was reported by Chinese media to have been detained last June.
The insurance regulator confirmed Wu was 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 cross-hairs 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.
Besides Wu’s reported links to Deng’s family, other examples include Wanda CEO Wang Jianlin — formerly the country’s wealthiest men and a past delegate to the Communist Party leadership congress held every five years.
Various media reports have said a range of other well-connected political figures in China have links to such conglomerates.
But 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 over-extend.
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.