Anbang chairman’s detention underlines China business risks
分析：吳小暉被帶走突顯中國商業風險

When the head of a large state-owned Chinese insurance company was recently asked at a meeting about one of his biggest private-sector competitors, Anbang, he shook his head in frustration. “We don’t understand their business model and keep losing market share to them,” the executive said, according to a person present. This week officials from the Chinese Communist party’s corruption watchdog are combing through Anbang’s books to answer such mysteries after detaining the group’s chairman, Wu Xiaohui, on June 9, according to two people familiar with the investigation. The dramatic developments at Anbang’s Beijing headquarters tower this week represent the culmination of two longer-running narratives: a financial sector investigation into companies that regulators fear are using dangerous amounts of leverage to fuel their businesses; and stricter vetting of outbound mergers and acquisitions since late last year in an attempt to stem capital flight. In recent years Anbang has emerged as one of China’s most acquisitive companies. Since October 2014 it has made more than a dozen deals worth $17bn, according to data compiled by Dealogic. News of Mr Wu’s detention was first reported on Tuesday night by Caijing, a leading Chinese financial magazine. Anbang later said its chairman was “unable to perform his duties”, citing unspecified “personal reasons”. Mr Wu’s detention has not been officially confirmed and Caijing’s report was later blocked by censors, raising the possibility that he could be released without charge. If Mr Wu does not reappear, he will become the highest-profile private sector Chinese businessman to be brought down by President Xi Jinping’s anti-corruption campaign. Earlier this year graft investigators began to turn their attention to the financial sector, including highly leveraged companies such as Anbang and another private sector insurer, Baoneng, which both sold risky investment products to fund high-profile acquisitions. “These firms are not true insurance companies,” says one person close to the investigation. “They are investment companies masquerading as insurance companies.” Mr Wu repeatedly rebuffed such criticism, arguing that the real secret of his group’s success was a leaner structure and much lower costs than its large state-owned rivals. Internationally, Anbang is best-known for its purchase of the Waldorf Astoria hotel in New York, while Baoneng launched a failed hostile takeover of one of China’s largest property developers. In February, China’s insurance regulator banned Baoneng chairman Yao Zhenhua, China’s fourth-richest man, from the industry for a decade after accusing the group of producing “false data” and misusing funds. “Wu built one of the biggest financial services brands in the world in no time at all,” says Rupert Hoogewerf, who compiles an annual list of China’s richest men and women. Mr Wu, however, never fully addressed questions about Anbang’s murky ownership structure, which forced it to withdraw a bid for Fidelity and Guaranty Life in the US. Last year Mr Hoogewerf’s Hurun Report named Anbang’s chairman as one of six individuals who should probably be included on its rich list — but was not there yet because of insufficient information about his financial holdings. Moreover, when Mr Wu tried to receive a credit rating from the US agencies so that he could issue bonds offshore, he was told he would be denied investment grade status because of the lack of clarity regarding Anbang’s shareholding structure, according to people familiar with the matter.People who have dealt with Anbang’s chairman describe him as a Chinese Icarus figure who pursued deals even when he had been warned not to by regulators. These included a failed $14bn bid for Starwood Hotels last year and a stake in Citic Pacific, a state-owned conglomerate that paid $36.5bn for its parent’s core operations in 2014. Earlier this year Mr Wu also tried to close a controversial New York real estate transaction with the family of Jared Kushner, US president Donald Trump’s son-in-law and adviser. The deal fell through only after the Kushner family decided the deal could become a political liability for the Trump administration, according to one person familiar with the negotiations. People who have dealt with him say Mr Wu came across as a low-key person who rarely spoke of his marriage to the granddaughter of China’s late paramount leader, Deng Xiaoping. But he could also be brash. Mr Wu boasted to one group of advisers that he knew everyone at China’s insurance regulator, “from the chairman to the doorman”. The chairman he was referring to, Xiang Junbo, was himself detained in April for alleged corruption. Additional reporting by Don Weinland and Xinning Liu