Lai Xiaomin: China sentenced former President Huarong to death for bribery

Lai Xiaomin – who previously led the presidency of Huarong Asset Management in China – was guilty of buying or seeking bribes of nearly 1.8 billion yuan ($ 277 million), a court in Tianjin port city said Tuesday. Chinese state media reported in August that he pleaded guilty at an earlier trial.

According to the court, the bribes took place in the 10 years before 2018, when Lai was examined as part of a broader austerity in the financial sector.

Legal observers say the sentencing rate in the Chinese court system is about 99%, and corruption allegations are often used after Communist Party insiders who oppose the leadership.
The scale of the crime is unprecedented. No one has been accused of raising such a bribe in the 72 years since the People’s Republic of China was formed, according to an article written by Wang Xiumei, a senior judge of the Supreme People’s Court, a law professor at Peking Normal University. the state-owned Legal Daily.

Authorities apparently acknowledged the historical nature of the crime: Because he announced Lai’s death sentence, the court called it “illegal and extremely greedy” in a statement.

Lai is the latest in the series prominent officials and executives who have fallen out of grace in the years since Beijing first took steps to cut risks and strengthen the Chinese Communist Party’s tightening of the financial sector.

Xiang Junbo, former chairman of the abolished China Insurance Regulatory Commission (CIRC), was sentenced in June to 11 years in prison for bribery. Yang Jiacai, the former deputy chairman of the then China Banking Regulatory Commission (CBRC), was sentenced in 2018 to 16 years for accepting a bribe. (Both agencies have been merged and the China Banking and Insurance Regulatory Commission has been established.)

But the decision to sentence Lai to death is striking. He is the highest-ranking official to receive the death penalty for economic crimes since President Xi Jinping took power in 2012. Before joining Huarong, Lai at the People’s Bank of China and the CBRC.

“Fully indicates the [Communist Party’s top leadership] determined in its corrupt action, “Wang wrote.

CNN Business was unable to reach Lai representatives for comment. The timing of his execution, meanwhile, is unclear. Cases of the death penalty are reviewed by the Supreme People’s Court before the sentence is carried out, and Lai may still appeal.

High flying company under investigation

Shortly after the 1997 Asian financial crisis, the government set up Huarong Asset Management as one of the businesses it manages. bad debts at state-maintained banks.

Lai became president of the company in 2009. He later became president. His term of office characterized by a period of rapid expansion. Huarong not only manages assets but also engages in lending and other forms of equity investment. In 2015, it raised $ 17.8 billion ($ 2.3 billion) from a Hong Kong IPO.

However, this aggressive growth has also attracted regulatory scrutiny. Huarong’s own debt / asset ratio jumped in Lai’s time as a top leader. In 2014, long before his arrest, banking regulators criticized the company’s trust department as “risky”.

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A documentary on the case against Lai was made in 2020 by the Central Disciplinary Control Committee, the Communist Party’s main disciplinary body.

A documentary broadcast by the state broadcaster CCTV claimed that Lai stored the money, jewelry and other items he received as a bribe in a Beijing apartment he called a “supermarket.”

“I didn’t spend a penny of it,” Lai said in the documentary.

Lai said he wants to save his money for his children.

“I didn’t dare spend it,” he added. – And haunted by fear.

As authorities investigated Lai, the range of their allegations expanded. In addition to allegations of bribery, he was also convicted of embezzlement and bigamy.

“Lai’s bribery is extremely high, the case is particularly serious, and his malicious intent is deep,” the court said Tuesday, adding that Lai took advantage of his position to make decisions that undermine “national financial security and stability.”

A signal to others

Huarong said on Wednesday he “strongly supports” the court’s decision, adding that the company remains in line with the Communist Party’s top leadership on ideology and action.

While Lai’s case is particularly serious, Beijing may indicate a willingness to take all possible steps to curb unruly industries, said Willy Lam, a professor at Hong Kong China University.

“Look at what is happening to Alibaba and Jack Ma,” he said, referring to an intensive study of one of China’s most prominent technology empires. Alibaba is facing an antitrust investigation, while Ma’s financial technology company, Ant Group, has been instructed to restructure parts of its business.

Xi “is likely to use Lai’s case to send a message to everyone, including the private sector,” Lam said.

– CNN’s Beijing office contributed to this report.