A Chinese court yesterday accused the former head of troubled Anbang Insurance Group (安邦保險集團) of embezzling more than US$10 billion as his high-profile fraud trial opened one month after authorities seized control of the big-spending conglomerate.
China’s insurance regulator last month announced an unprecedented takeover of Anbang, saying fallen chairman Wu Xiaohui (吳小暉) would be prosecuted for financial crimes, as the government moves aggressively to prevent heavily indebted large private companies from collapsing and triggering a financial crisis.
Wu’s trial began yesterday morning at the Shanghai No. 1 Intermediate Court, where prosecutors accused him of defrauding Anbang of 65.25 billion yuan (US$10.4 billion).
The funds were transferred to companies he personally controlled for investment overseas, to pay down debts, or “personally squandered,” the court said on an official social media account.
The court also was told that Anbang had sold investment products that exceeded allowable fundraising amounts by 723.9 billion yuan.
“The accused Wu Xiaohui said that he did not understand the law and did not know that these actions constituted crimes,” the court said.
It was not clear what plea was entered by Wu.
The government’s swoop on Anbang was its most aggressive move yet to rein in politically connected conglomerates like Anbang that grew rapidly and launched a wave of multibillion-dollar overseas investments fueled by debt.
The court gave no indication when the trial would conclude, but such proceedings are often wrapped up within a day, especially in sensitive cases that the government does not want dragged out.
The government of Chinese President Xi Jinping (習近平) has made cleaning up financial risks a top national priority.
The highly unusual commandeering of Anbang signaled deep official concern over the Beijing-based company’s financial situation and appeared to confirm that toxic financial risks lurked in the world’s second-largest economy.
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