US officials believe China’s insurance regulator passed on proprietary information about American International Group Inc (AIG) to its Chinese rivals during the US firm’s collapse in 2008, according to unpublished diplomatic cables.
The US government bailout of AIG in 2008 sent shock waves around the world, and China seemed especially rattled.
The Chinese Insurance Regulatory Commission (CIRC) forced AIG’s local operations to open their books on a daily basis after the firm’s September 2008 rescue, a series of US diplomatic cables obtained by WikiLeaks and provided to Reuters by a third party showed.
The regulator then shared the confidential information with local competitors, in part to convince at least one of them to buy the troubled assets.
The cables were based on diplomats’ repeated conversations with unidentified AIG executives.
While the regulator’s efforts went for naught — AIG’s various Asian operations were ultimately sold in part to MetLife and in part to the public in the initial public offering of AIA Group — the cables shed new light on the way the Chinese approach large and troubled foreign companies.
“CIRC appears to be mixing its role as a regulator of China-based insurance companies with intentions to support domestic Chinese insurers,” the US consulate in Shanghai wrote in an Oct. 22, 2008, cable.
“That CIRC would coordinate closely with domestic Chinese insurance firms is no surprise, but the situation here appears to take this a step farther, with CIRC actively eliciting information from AIG that would be helpful to AIG’s Chinese competitors in acquiring parts of AIG’s business,” it said.
The Chinese regulator, in a statement, said its actions were appropriate and suggestions to the contrary were “a serious departure from the facts or sheer fabrication.”
“During the period when [China] dealt with the global financial crisis, CIRC maintained unhindered communication with insurance regulators of various countries, including the United States, and regulated AIA, AIU and other foreign insurance firms operating in China in accordance with laws and regulations. AIG and its China office never raised the various problems stated in your [news] agency’s interview outline,” it said.
AIG executives told consular officials in Shanghai they were summoned to Beijing the day after the rescue to explain themselves, the speed of the request coming as a surprise.
The next day, AIG told consular officials Shanghai-based regulators threatened to immediately pull the company’s licenses if it did not disclose — and stop enforcement of — any support arrangements with other AIG units.
The first indication of a more direct purpose came on Sept. 25, 2008, when AIG told consular officials the CIRC had had a meeting of domestic insurers to see if any wanted to buy the AIG operations, and at least one said yes. The cable did not disclose who that potential buyer was.
But by Oct. 22, 2008, AIG said the CIRC apparently already had a favored buyer — China Life Insurance Co (中國人壽), the world’s most valuable insurer. It remains unclear how far the commission went to arrange or push China Life’s candidacy as a buyer.
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