Tycoon in China Fights Fraud Verdict, but Odds Are Long

0
69

SHANGHAI — When top Chinese business leaders and officials face charges, they usually have one option: Go quietly.

The tycoon at the center of one of China’s biggest cases of financial fraud seems to be taking a different path.

A lawyer representing Wu Xiaohui, a businessman who rose to prominence in part through his company’s purchase of the Waldorf Astoria hotel in New York, said Wednesday in a social media post that Mr. Wu would appeal a lengthy prison sentence for bilking investors. The lawyer, Chen Youxi, said the Shanghai High People’s Court was already preparing for a review.

Although the post was subsequently taken down, Mr. Chen’s law firm, Capital Equity Legal Group, said the information was accurate.

Mr. Chen’s post also said that Mr. Wu had hired the lawyer Li Guifang, who is best known for defending the Chinese politician Bo Xilai in a blockbuster corruption trial in 2013.

If Mr. Wu goes through with it, an appeal will be a high-profile test of a court system that convicts nearly everyone prosecutors accuse and that often takes a dim view of open confrontation to its rulings. In pushing back, he could goad the courts into an even harsher sentence.

Mr. Wu’s company, Anbang Insurance Group, was seized in February in a case that offered a glimpse at some of the big risks hidden within China’s vast but troubled financial system. His prosecution was widely interpreted as an effort by Beijing to make an example of a firm that had become emblematic of a spree of debt-fueled overseas purchases by Chinese companies.

In the face of a possible life sentence, Mr. Wu had pleaded guilty to defrauding investors out of more than $10 billion and asked the court for a lighter sentence. This month he was sentenced to 18 years in prison.

Despite his guilty plea, Wednesday’s post represents the second time that Mr. Wu has disputed the Chinese government’s charges against him. In a March court appearance, he said he did not know whether what he had done constituted a crime, according to the court. But just hours later, it said, he pleaded guilty.

Human rights groups have long criticized the Chinese justice system for the prevalence of forced confessions, which those accused sometimes later disavow. Chinese officials sometimes use them for propaganda purposes, in order to make public examples of the accused.

Defendants may have little choice. Historically, China’s conviction rate has hovered at well above 90 percent, though more recent statistics are harder to come by. Between 2013 and 2017, Chinese trial courts convicted more than six million suspects in about 5.5 million cases. Only about 6,700 were reopened and retried.

In Mr. Wu’s case, he was charged with misleading investors with false financial statements and promotional materials, among other accusations.

Prosecutors said Mr. Wu had helped design investment-type insurance products and then misled regulators in efforts to raise money from the public. By the beginning of 2017 the company had sold $116.5 billion of the products, far more than the amount the government had approved. China has been trying to rein in such borrowing, which it fears could destabilize the economy.

Because of the company’s sprawling international holdings, the seizure sent shock waves as far as Canada, where the company had purchased a chain of retirement homes, and Amsterdam, where it had bought an insurance company.

Anbang has said that Mr. Wu has been relieved from all duties as chairman of the company and that its operations are under state supervision.

Follow Paul Mozur on Twitter: @paulmozur.

Carolyn Zhang contributed research.

LEAVE A REPLY

Please enter your comment!
Please enter your name here