The Chinese state media reported that an 18 years prison statement sentence has bene delivered on the founder of the Chinese insurance company Anbang, owner of New York City’s Waldorf Hotel, by a court in Shanghai on Thursday. The sentence was delivered after he pleaded guilty of illegally raising billions of dollars from investors.
10.5 billion yuan ($1.6 billion) in assets wa slaso ordered to be confiscated from Wu Xiaohui, the former chairman of Anbang Insurance Group by Shanghai’s No. 1 Intermediate People’s Court. The group had earned itself a reputation of aggressive expansion into hotels, real estate and insurance in foreign countries ranging from Canada to South Korea.
Wu was found guilty of misleading investors and siphoning off that money for his personal use. Privately held Anbang was founded by him in 2004. Regulators had taken control of the company after his arrests in February. He was shown admitting his guilt publicly on television.
According to an earlier court statement. Wu initially had denied his guilt at his one-day trial.
Wu lured investors by offering rates of return above that offered elsewhere, filed false statements with financial authorities and concealed his ownership of shares in companies controlled by Anbang, according to Chinese news media house Xinhua. Most of the revenues of the company was dependent on the selling insurance products for raising investment capital
It has bene alleged the Wu made use of over 100 companies that he controlled to garner funds and later Chinese investigators located bank savings, real estate and other assets in his name. According to a report in the Xinhua, 10 billion yuan of Anbang’s deposits was misappropriated by Wu using his power.
The “degree of social harm” of the case, the severity of the crime and the facts of the case were the basis for the judgement of the court. Xinhua said.
A government bailout of $9.6 billion is being received by it. Anbang said last month. that means that most of the stake in the company of Wu and other shareholders would be wiped out and the government funds would have 98 percent of the company stocks.
There were questions about the stability of the company in recent time as it had gone into a spree of buying assets globally.
The Chinese insurance industry had been long dominated by state owned companies and the case of Anbang is one in s series of such incidents which have tainted the industry. there have been allegations of reckless speculation in stocks and real estate against insurers while in September, charges were framed against the industry’s former top regulator.
(Adapted from ArabNews.com)