State prosecutors in Shanghai on Friday announced the indictment of Wu Xiaohui, former CEO and general manager of the embattled state-owned conglomerate Anbang Insurance, which has now been seized by the authorities.
Wu, a member of the ruling Chinese Communist Party's "2nd generation revolutionary" elite, stands accused of financial fraud and abuse of his position, the No. 1 branch of the Shanghai People's Procuratorate said in a brief statement.
The case has been forwarded to the Shanghai Intermediate People's Court, paving the way for a trial, it said.
Meanwhile, the China Insurance Regulatory Commission said Anbang, a Fortune 500 company, had violated laws and regulations which "may seriously endanger the solvency of the company."
The indictment comes after Wu, who is married to Zhuo Ran, the granddaughter of late supreme leader Deng Xiaoping, was placed under investigation on June 9.
An employee surnamed Li who works at rival insurance giant Pacific Insurance, the decision to press ahead with Wu's likely trial is a political one, because China's insurance industry is all ultimately backed and controlled by the ruling Chinese Communist Party.
"All insurance companies in China have state-owned assets behind them," Li said. "They are actually party property."
A veteran journalist surnamed Chen, who has been following the Anbang investigation, said the authorities now seem to be trying to distance the case from its association with Deng, whose family is close to being revolutionary royalty among China's ruling elite.
"They have made it very clear that this is now outside of the Deng family," Chen said. "The charges that they have brought against him are very interesting, though, but to accuse him of financial fraud is pretty serious."
"This means that government has concluded that he tried to cheat and defraud people," he said. "Whose money was invested [in his companies]? It's hard to tell exactly where the fraud is alleged to have taken place."
Complex ownership patterns
Wu, 52, hails from the eastern province of Zhejiang, and made his first fortune in automobile sales, setting up Anbang in 2004.
Media reports emerged last year claiming that Wu and Zhuo had divorced, but Wu later denied them publicly.
Anbang is China's third largest insurer with 1.97 trillion yuan (U.S. $290 billion) in total assets, and recent reports by financial news service Caixin and The New York Times have exposed complex ownership patterns linking much of its assets to Wu and his wife.
Caixin's cover story “A Maze of Capital Leads to Anbang’s Aggressive Expansion” prompted legal threats and counter-threats amid strenuous denials from the company.
The company was propelled into the international spotlight with its purchase of New York's iconic Waldorf Astoria hotel in 2015, and has made other international deals worth U.S. $30 billion.
The company was banned from issuing any new financial products for three months in May by China's insurance regulator, which cited shoddy risk-management practices.
It will now be managed by officials from the China Insurance Regulatory Commission, the central bank and other financial bodies, for one year, in a bid to restructure its ownership while keeping it open for business.
Reported by Wong Siu-san and Lam Kwok-lap for RFA's Cantonese Service, and by Shi Shan for the Mandarin Service. Translated and edited by Luisetta Mudie.