Wu Xiaohui, the former chairman of Chinese insurance giant Anbang Group, which currently holds the Waldorf Astoria in New York and Strategic Hotels & Resorts among its hotel assets, and nearly acquired Starwood Hotels for US$14 billion in 2016, has been sentenced to 18 years behind bars for fraud and embezzlement worth more than US$12 billion.
Wu, once backed by China’s most powerful state firms and the industry’s top regulator, will also have US$1.65 billion in assets confiscated, according to China’s official state news agency.
Wu was put on trial in Shanghai in late March, charged with illegal fundraising, fraud worth US$10.24 billion and embezzling from Anbang’s insurance premium income.
Anbang, founded in 2004, has grown from a seller of car insurance into one of China’s largest insurance providers, holding nearly 2 trillion yuan in assets (US$315 billion). The Chinese government seized control of the company in February.
After Thursday’s sentencing, the company put out a statement saying, “Anbang has sufficient cash flow to fulfill its commitments to all customers and ensure that the legitimate rights of policyholders are effectively protected.”
The big question now is what will happen to the Waldorf in New York City, as well as the assets under Strategic Hotels & Resorts. Blackstone Group was rumored in February to be interested in re-acquiring those assets. Several industry leaders have speculated that the Chinese government will sell the assets – but no one is expecting a fire sale. In April, Anbang was reportedly interviewing investment banks to advise on potential asset divestments.
The South China Morning Post reported that Thursday’s sentencing closes a key chapter in a series of investigations into several of China’s biggest overseas asset buyers – known in China as “crocodiles” – since June 2017, in a government program to pare back leveraged buyouts and rein in financial malfeasance.