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China injected $ 9.7 billion in the aftermath of fraud



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China injects 60.8 billion yuan (US $ 9.7 billion) Anbang Insurance Group Co. seeks to stem the fallout after the former company leader was accused to have committed a billion-dollar fraud

The move aims to ensure the solvency of Anbang and protect policyholders' interests Regulatory Commission said Wednesday. The government is trying to reform and stabilize a company that entered the global scene in 2014 with the purchase of the New York Waldorf Astoria Hotel, but was seized by regulators in February.

Photographer: Qilai Shen / Bloomberg

Anbang former chairman Wu Xiaohui is accused of causing a massive fraud by using unauthorized sales of investment policies to support the capital of the acquisition company. The case against him is one of the most striking examples of China's war on financial risk; In court, prosecutors alleged last week that Wu's actions threatened national financial security. With the introduction of capital, the government protects the banks that financed the ban and the public that invested in its products, said Brock Silvers, Managing Director of Kaiyuan Capital.

"Bank failure could have an economic impact A broad class of retail investors could influence the position of the Communist Party in public," Shanghai-based Silvers said in an e-mail.

The money comes from the China Insurance Security Fund, an industry-funded body that worries insurers that had 116 billion yuan in January. It plans to hold its stake in Anbang only temporarily, the company said in a statement .

How Deal-Hungry Anbang went from Waldorf to Wehe: QuickTake

Much of Anbang's growth was fueled by sales of term, high-yield products, which the company uses to fund purchases of long-term assets such as real estate – a duration mismatch that had long troubled analysts and regulators.

The charges against Wu's alleged misconduct go back as far as 2007 He had fraudulent financial statements last week and used funds from fraud for investment, debt repayment and personal use, a Shanghai court said last week.

Wu denied both the facts and the charges, saying that he did not. I do not understand the law and did not know if his behavior is criminal, the court said. He was later cited by the court as he said he "realized the crimes and repented the crimes" and demanded leniency.

Anbang's registered capital will be held at 61.9 billion yuan after injection, the CIRC said The company will begin to select strategic investors and intends to introduce private capital as soon as possible.

The Chinese government took control of Anbang for at least a year in February.

– With support from Emma Dong, and Gary Gao


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