The government of China announced on Friday it has taken control of Anbang Insurance Group, a troubled company in China that is owner of New York City’s Waldorf Astoria hotel as well as other well-known properties across the globe, and that it charged the former chairman of the company with crimes.
This move is the biggest effort to date by Beijing to rein in a globally ambitious company based in China. Anbang as well as others similar to it have spent billions of dollars across the globe buying hotels as well as other properties that are high profile.
The deals illustrate the growing economic strength of China, but fed concerns that rising levels of debt could slow down growth in the second largest world economy behind just that of the U.S.
The deal raised questions as well over who is controlling many of the companies and if they are tied to the top leader in China. Anbang has come under scrutiny in particular in the U.S. as well as elsewhere for the opaque ownership structure it has and for the political ties that Wu Xiaohui its former chairman has.
The insurance regulator in China in a notice with Friday’s date said that Anbang was going to be overseen for one year by a group that includes the central bank of China, its banking and securities regulators, the foreign exchange regulator of the country, and other agencies in the government.
The notice added that Anbang violated regulations that put into question an ability to pay out insurance claims.
The regulator added that the takeover might extend into a second year if the business did not complete a required equity restructuring and resume its operations. It added that the takeover would not go further than two years.
Shanghai Procuratorate handles the prosecutions in that city, and announced on Friday that the former chairman at Anbang, Mr. Wu was formally indicted in court for fund-raising it called fraudulent and for improperly taking assets of the company.
Wu was at one time a major figure in business circles in China and married the granddaughter of China paramount leader of the 1980s Deng Xiaoping, a huge figure in politics in China and considered widely to be very well connected politically.
However, in June authorities detained Wu suggesting any sway he had politically from before might have ebbed.