Xiao Jianhua, a Chinese Canadian billionaire and onetime trusted financier to China’s ruling elite, was sentenced to 13 years in prison on Friday, and his company fined $8 billion, after he pleaded guilty to bribery and other crimes that authorities said had “seriously jeopardised” the country’s financial security.
Xiao, whose Tomorrow Group umbrella of companies was once worth hundreds of billions of dollars, was also fined the equivalent of $1 million, a Shanghai court said on Friday.
One of several Chinese tycoons caught in the crosshairs of a crackdown on corruption, Xiao was snatched from his home in a Hong Kong luxury hotel in 2017 and disappeared into Chinese custody.
There was no news of him until 2020, when Chinese officials confirmed he was on the mainland and cooperating with the government in restructuring his businesses. Last month, he reemerged to stand trial in a Shanghai court, but authorities kept details of the charges against him a secret.
His trial, which began on July 4, was attended by top Chinese officials, including deputies to the National People’s Congress and members of the China People’s Political Consultative Conference, China’s state news media reported on Friday.
Xiao and his business relationships — which reached as high as the family members of China’s top leader, Xi Jinping — were once an illustration of the close ties between China’s business world and the political elite.
The Tomorrow Group empire came to symbolise the excesses of China Inc, and its demise in 2020 was a signal from regulators that an era of freewheeling finance — in which wealthy executives used their political connections to build huge companies that scooped up trophy assets at home and abroad — was over.
The Shanghai First Intermediate Court said that Xiao had been convicted of several charges, including illegally absorbing public funds, betraying the use of entrusted property, and illegally using funds and bribery. Xiao had “surrendered, admitted guilt and accepted punishment”, it said, adding that he also cooperated in helping to recover stolen funds.
Tomorrow Group did not respond to a request for comment, and Xiao did not immediately respond to a request for comment through an intermediary. The Canadian Embassy in Beijing did not immediately respond to requests for comment. It had previously said that Chinese authorities rejected several requests submitted by the embassy to attend the trial of Xiao, who holds Canadian citizenship.
Using Tomorrow Group, Xiao built up financial ties in companies that stretched into all areas of China’s economy, from banking and insurance to rare metals, coal and real estate. It had financial stakes in some of the country’s biggest firms, including the insurer Ping An and financial institutions like Huaxia Bank, Industrial Bank and Harbin Bank.
As his corporate empire grew, Xiao became wealthy, amassing an estimated $5.8 billion in net worth. Tomorrow Group eventually became so big that it threatened the country’s financial stability.
One example of its messy financial ties was its stake in Baoshang Bank. Tomorrow Group used the bank to extend loans to other Tomorrow Group companies but kept those loans off the books for years. Then in 2019, the bank was pushed to the brink of bankruptcy, prompting regulators to take it over.
The next year, regulators also stepped in to dismantle Tomorrow Group, in a move intended to send a strong message to China’s corporate sector to rein in excessive borrowing.
The court said that between 2001 and 2021, Xiao and Tomorrow Group used shares, real estate holdings and other assets worth $100 million to bribe government officials and evade financial supervision.
“The criminal acts of Tomorrow Groups and Xiao Jianhua seriously damaged the financial management order, seriously jeopardised the national financial security, seriously infringed on the integrity of the state staff, and should be severely punished according to law,” the court said in its statement.
Xiao would eventually become ensnared in an anti-corruption drive waged by the man who took charge of China in 2012, Xi.
But the two had a prior connection. Xiao had previously bought shares in an investment company owned by the sister of Xi and her husband, according to a New York Times investigation. At the time, a spokeswoman for Xiao told The Times that the couple “did it for the family”.
This article originally appeared in The New York Times
