HONG KONG — Xiao Jianhua, a Chinese-Canadian billionaire and once a trusted financier of China’s ruling elite, was sentenced to 13 years in prison on Friday and his company was fined $8 billion after admitting bribery and others had pleaded guilty to crimes that the authorities described as “serious” which endangers the country’s financial security.
Xiao, whose Tomorrow Group umbrella was once worth hundreds of billions of dollars, was also fined $1 million, a Shanghai court said on Friday.
Xiao, one of several Chinese business tycoons targeted by anti-corruption fighters, was kidnapped from his home in a luxury Hong Kong hotel in 2017 and disappeared into Chinese custody. There was no news from him until 2020, when Chinese officials confirmed he was in the mainland and working with the government to restructure his businesses. He reappeared last month to stand trial in a Shanghai court, but authorities kept details of the charges against him secret.
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His trial, which began on July 4, was attended by senior Chinese officials, including deputies to the National People’s Congress and members of the Chinese People’s Political Consultative Conference, China’s state news media reported on Friday. Xiao and his business connections – which extended to family members of China’s Supreme Leader Xi Jinping – were once an example of the close ties between China’s business community and the political elite.
The Tomorrow Group empire became a symbol of China Inc.’s excesses, and its demise in 2020 was a signal from regulators that an era of freewheeling finance was dawning – in which wealthy executives used their political connections to build huge corporations, amassing trophy fortunes at home and abroad — was over.
The Shanghai First Intermediate Court said on Friday that Xiao has been convicted of multiple charges including illegally taking public funds, treason in using entrusted property, and illegally using funds and bribery. Xiao “surrendered, admitted his guilt and accepted the punishment,” the statement said, adding that he also helped recover stolen funds.
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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 government said Chinese authorities have repeatedly denied attempts to attend the trial of Xiao, who holds Canadian citizenship.
“The lack of transparency in Mr. Xiao’s legal process is of great concern, as is the continued lack of consular access, which prevents us from assessing his well-being,” said Patricia Skinner, spokeswoman for Global Affairs Canada, Canada’s international affairs arm government said in an emailed statement.
A Chinese foreign ministry official said Friday that China does not recognize dual citizenship. “Xiao Jianhua will be sued by the relevant authorities in China under Chinese law,” said Wang Wenbin, a ministry spokesman.
With the help of Tomorrow Group, Xiao developed financial connections with companies that spanned every sector of the Chinese economy, from banking and insurance to rare metals, coal and real estate. It had financial stakes in some of China’s largest companies, including insurer Ping An and financial institutions such as Huaxia Bank, Industrial Bank and Harbin Bank.
As his corporate empire grew, Xiao became wealthy, amassing an estimated net worth of $5.8 billion. The Tomorrow Group eventually grew so large that it threatened the country’s financial stability.
An example of his chaotic financial connections was his stake in Baoshang Bank. Tomorrow Group used the bank to make 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 following year, regulators also stepped in to wind up Tomorrow Group, in a move that should send a strong signal to China’s corporate sector to curb excessive borrowing.
The court said Friday that between 2001 and 2021, Xiao and Tomorrow Group used $100 million worth of stock, real estate holdings and other assets to bribe government officials and evade financial oversight.
“The criminal actions of Tomorrow Groups and Xiao Jianhua have seriously damaged the financial management order, seriously endangered national financial security, seriously violated the integrity of state personnel and should be severely punished under the law,” the court said in its statement Friday.
Xiao eventually became embroiled in an anti-corruption campaign run by the man who took over China in 2012, Xi.
But the two had a prior connection. Xiao previously bought shares in an investment company owned by Xi’s sister and her husband, according to an investigation by The New York Times. At the time, a spokeswoman for Xiao told the Times that the couple “did it for the family.”
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