Statement purportedly by Chinese oligarch's Tomorrow Group hits back at regulators for breaking up Xiao Jianhua's conglomerate
Enoch Yiu enoch.yiu@scmp.com
5 min read
Tomorrow Group, the sprawling conglomerate with businesses from financial services to real estate in the middle of one of China's biggest corporate break-ups, appears to be hitting back at a government move to seize its subsidiaries.
In a four-point, unsigned statement released via Tomorrow Group's WeChat account on Saturday, the conglomerate founded by the Chinese oligarch Xiao Jianhua pointed to several procedural questions that implied that financial regulators were so set on taking over the group's assets that they ignored the debt-restructuring efforts already under way.
Hours after appearing on WeChat, the statement was removed for "breach of rules," according to an automated notice on the social network app, and could not be found on Tomorrow Group's website, which showed its last update as July 2016. The authenticity of the statement could not be immediately verified. Phone calls and emails to Tomorrow Group's office in Beijing went unanswered.
Xiao, who has not been seen since in public, is awaiting trial at an unknown location on charges of bribery and manipulating stock prices, while key pieces of his empire had been taken over one by one, shut down or sold.
A Beijing branch of Baoshang Bank, the first of the Tomorrow Group' financial assets to be seized by regulators, on May 28, 2019. Photo: Bloomberg
Huaxia Life Insurance, Tian'an Property Insurance, Tian'an Life, Yi'an Property Insurance, New Times Trust and New China Trust were placed under state ward to "protect the rights of policy holders, customers and serve the public's interest," the China Banking and Regulatory Commission (CBIRC) said in a statement on Friday. Separately, New Times Securities, Guosheng Securities and Guosheng Futures were placed under the government's management for a year, the China Securities Regulatory Commission (CSRC) said.
The press offices of both the CBIRC and the CSRC in Beijing were not staffed on a weekend to respond to queries, and did not respond to phone calls and emails for comment.
Neither the banking and insurance regulator nor the securities industry watchdog associated any of the nine financial firms under their ward to Tomorrow Group, although ownership links to all nine companies were confirmed by the conglomerate in its statement on Saturday.
The front gate of China Banking and Insurance Regulatory Commission (CBIRC). Photo: CCTV.com
In its July 18 statement, Tomorrow Group pointed out that it had collaborated with the Chinese government's investigations since Xiao "was returned" to the mainland in 2017.
The company's management had effectively been "stripped of any autonomous management, barred from normal operations and expansion, while the normal movements of staff were curtailed," according to the statement.
Huaxia Life, founded in 2006, is the privately owned flagship and the largest chunk of Xiao's conglomerate, with 182.8 billion yuan (US$26.12 billion) of insurance premium in 2019, ranking it fourth among China's biggest life insurers.
Several companies including China's most valuable insurer Ping An Insurance (Group) had been in talks since Xiao's takedown to buy either all or part of Huaxia Life, even though a deal had not been announced, according to two sources familiar with the matter.
A sales agreement for the insurer was submitted in October 2019 to the banking regulator for approval after the initial down payment for the disposal paid, Tomorrow Group said, without naming the buyer or divulging the value of the stake sold. Ping An officials declined to comment.
Three other companies among those taken over - Tian'an Life, New Times Trust and New China Trust - had competed their restructuring plans and had submitted their sales proposals for regulatory approval before they were nevertheless seized, Tomorrow Group said, without divulging further details.
The group, with 2 billion yuan of cash on its balance sheet, was denied permission to make use of that cash to repay its debt, according to Tomorrow Group's statement, without elaborating. Units of the group haven't seen any defaults and don't have much liquidity risk, the statement said.
