Once called a “child prodigy” when he entered Peking University at the age of 14, Xiao Jianhua built a billion-dollar business empire, before being arrested.
The Canadian Embassy in Beijing yesterday announced that Xiao Jianhua, a Canadian citizen, is being tried by Chinese authorities on undisclosed charges. This is the first time information about this Chinese-born billionaire has been published since he was taken from a luxury hotel in Hong Kong five years ago.
Sheet Wall Street Journal reported that Xiao, 50, was charged by Shanghai prosecutors with illegal deposit collection, which means raising money from the public without a license.
The Canadian embassy in Beijing said it would closely monitor the trial, but it was unclear how long it would last. Xiao’s case is believed to be part of a campaign Beijing is carrying out to deal with the public debt that has contributed to China’s explosive growth in recent decades.
In 2020, the Chinese government blocked 9 companies, worth hundreds of billions of dollars, related to Tomorrow Group. It is the parent company behind the massive business empire Tieu has built over two decades, thanks in part to his connections.
Born in a poor rural village in eastern China, Xiao Jianhua was considered a “child prodigy” when he entered the prestigious Peking University at the age of 14. He served as the university’s student union president when the Tiananmen incident broke out in 1989.
While many classmates joined the movement, Tieu remained loyal to the government. This gives him the advantage of calling for investment in initial business projects from the university’s support.
After graduating and entering the financial industry, Xiao received an investment from Peking University for a business project. Around this same time, he founded Tomorrow Group.
Tieu’s fortune grew rapidly, in part because he had successfully cultivated relationships with government officials. Much of Tieu’s business is done through a complex network of front companies.
Rupert Hoogewerf, head of Hurun Report, said Tieu used his knowledge of market economy and leverage to build a large empire. However, clarifying the billionaire’s assets is difficult because “he built very complex structures”.
“Tieu is considered a very intelligent and reserved person,” said Hoogewerf. “Investors respect Tieu because he comes from Peking University, not a novice to enter the market.”
The time when Xiao built his business empire was also when China entered the period of economic growth and privatization most strongly in the 1990s and 2000s.
Over time, Tieu has built a fortune worth $5.97 billion, according to 2016 estimates. At one point, he owned shares in more than 30 Chinese financial institutions, including Insurance Ping’an, one of China’s largest insurance companies, as well as Harbin Bank, Huaxia Bank and Industrial Bank.
Through Tomorrow Group, Xiao has accumulated shares in companies that reach all sectors of the Chinese economy. But Tomorrow Group has also become so large that it threatens the stability of China’s financial system, forcing the Chinese authorities to step in.
After coming to power in 2012, Chinese President Xi Jinping announced the launch of a large-scale anti-corruption campaign “smashing tigers and killing flies”. The campaign quickly caused thousands of senior officials to “fall off their horses” and put considerable pressure on businessmen like Tieu.
There are many signs that Tieu has begun to sense the political winds are turning. He bought a house in Canada and naturalized the country. Tieu also holds a diplomatic passport to Antigua and Barbuda, an island nation east of the Caribbean Sea.
Some sources say that a warrant for Xiao’s arrest was issued in 2013, but the billionaire had previously moved to Hong Kong and spent most of his time living in a serviced apartment at the Four Seasons hotel and being protected. by a group of female bodyguards.
On January 28, 2017, on the occasion of the Lunar New Year, Tieu was taken out of the Four Seasons hotel room by a group of people. These people are believed to be Chinese security officers, carrying out orders to bring Xiao back to the mainland. Xiao seems to be classed as “tigers” in Xi’s anti-corruption campaign.
In 2019, Chinese authorities took over Baoshang Bank, once controlled by Tomorrow Group, after it was reported that the bank was on the verge of bankruptcy. This is the first time in two decades that the Chinese government has taken over a bank.
According to the investigation, the loans that Baoshang grants to Tomorrow Group’s companies are kept off the books.
In 2020, Chinese regulators took control of two securities companies and a derivative of Tomorrow Group for allegedly providing false information about shareholders and executives.
In July 2021, authorities extended the blockade order of 9 companies for another year “in order to handle risks and minimize financial risks”. Tomorrow Group also participates in state-dominated industries such as banking, insurance, coal, cement, real estate and rare earth minerals.
Aside from the takeover announcements, Chinese authorities have provided little more information about Xiao’s case. For many years, no information has been revealed about his whereabouts since Tieu was arrested in 2017. The most striking thing at that time was the image of Tieu sitting in a wheelchair and being surrounded by a group of people. Unidentified man pushed out of hotel.
It was not until 2020, that Tomorrow Group confirmed that Tieu had returned to the mainland and was working with the government to restructure the group. It is not clear what sentence this billionaire may face.
Vu Hoang (Theo NY Times)