(Reuters) - The former chairman of China’s Anbang Insurance Group Co Ltd has been found guilty of fraud and embezzlement and sentenced to 18 years in prison, three months after the state seized control of an insurer famed for buying New York’s Waldorf Astoria hotel.
Wu Xiaohui will also surrender 10.5 billion yuan ($1.65 billion), and his bank accounts, properties, shares, companies and other assets have been frozen by the police, the Shanghai No.1 Intermediate People’s Court said in a statement on its website on Thursday.
The court said Wu illegally raised 65.2 billion yuan through the sale of insurance products beyond regulatory limits, and embezzled 10 billion yuan from Anbang’s insurance fund.
When contacted by Reuters, an Anbang spokesman said the insurer, which is under government supervision, is stable and has “sufficient cash flow” to fulfill commitments to all customers.
Reuters could not reach Wu or his representatives for comment.
The judgment comes six weeks after a one-day trial in which Wu initially contested the charges against him. In his closing statement, however, he said he understood and regretted the crimes and requested leniency.
In its statement, the court said Wu concealed the extent of his shareholding of Anbang Insurance and Anbang Property & Casualty Insurance Co Ltd. It said he also incited others to fake documents to mislead the regulator into approving the sale of some insurance products.
The downfall of Anbang, widely known for its splashy overseas acquisitions including the $1.95 billion purchase of the Waldorf Astoria, highlights the government’s resolve in a sweeping campaign to reduce financial risk and discourage what it sees as profligate investing by large conglomerates.
Authorities officially seized control of Anbang and revealed the prosecution of Wu on Feb. 23. The state takeover would last for one year, during which Anbang will be managed by officials from financial regulators and government bodies.
In April, the banking and insurance regulator approved a 60.8 billion yuan capital injection for Anbang in a state-backed bailout aimed at smoothing the firm’s transition following Wu’s prosecution, and aiding government efforts to find private strategic investors.
Founded in 2004, Anbang became one of the most aggressive investors in a wave of major overseas acquisitions by Chinese firms in recent years that have attracted the attention of investors as well as global regulators.
Reporting by Shu Zhang and Hong Kong newsroom; Editing by Shri Navaratnam and Christopher Cushing