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Published: Wednesday, March 28, 2018 @ 1:55 AM
Updated: Wednesday, March 28, 2018 @ 1:55 AM
BEIJING — The founder of the Chinese insurer that owns New York City's Waldorf Hotel went on trial Wednesday on charges he fraudulently raised $10 billion from investors and misused his position to enrich himself.
Wu Xiaohui, chairman of Anbang Insurance Group, was detained last year. Regulators took control of privately owned Anbang in February following a multibillion-dollar global buying spree that prompted questions about its financial stability.
The case added to an avalanche of scandals for Chinese insurers. The industry's former chief regulator was charged in September with taking bribes. Executives of other insurers have been charged with corruption and mismanagement.
Beijing announced plans March 13 to merge the Chinese banking and insurance regulators in an effort to step up scrutiny of those fast-evolving industries. The ruling Communist Party has made reducing financial risk a priority after a run-up in debt owed by Chinese companies and local governments prompted rating agencies last year to cut Beijing's credit rating for government borrowing.
Wu is accused of fraudulently raising 65 billion yuan ($10 billion) and abusing his post to divert money for his own use, according to a report by prosecutors on the social media account of the Shanghai No. 1 Intermediate People's Court.
In court, Wu's lawyer argued what he was accused of doing was a violation of regulations but not illegal, according to another post. A third post said Wu objected that he didn't understand the law and didn't know whether what he did was illegal.
Most trials in China last no more than a day, even for complex financial cases. There was no indication when a verdict in Wu's case might be issued.
Anbang discussed possibly investing in a Manhattan skyscraper owned by the family of U.S. President Donald Trump's son-in-law and adviser, Jared Kushner. Those talks ended last year with no deal.
Regulators said they took control of Anbang on Feb. 23 to protect its solvency and consumer rights. The China Insurance Regulatory Commission said the takeover had no effect on Anbang's financial obligations.
On Wednesday, Anbang issued a statement on its social media account saying its business is stable has "sufficient cash flow" to meet policy commitments.
Wu founded Anbang in 2004 and gained a reputation for aggressive expansion in a stodgy industry dominated by state-owned insurers.
The company grew to more than 30,000 employees with 35 million clients. It diversified into life insurance, banking, asset management, leasing and brokerage services.
Questions about Anbang's future have swirled since it announced Wu handed his duties to deputies in June following news reports he was detained for questioning.
Anbang's buying spree stumbled after Beijing tightened investment controls in late 2016. Regulators said they wanted to cool spending on foreign real estate and other assets they said did nothing to develop China's economy.
Following that, Anbang failed to complete several deals, including the proposed purchase of U.S.-based Fidelity & Guaranty Life for $1.6 billion.
Wu also is accused of ignoring regulatory limits in selling high-interest investment products as short-term insurance contracts, according to Wednesday's statement.
Such sales raised 724 billion yuan ($115 billion) from 10.6 million investors from 2011 to 2017, the statement said. It said some of that money was transferred to companies controlled by Wu for "reckless personal spending."
Regulators warned Anbang and other insurers last year about use of such investment products.
Other insurers have been accused of endangering the financial safety of their industry through reckless speculation in stocks and real estate. The chairman of a life insurance company was barred from the industry last year in an unrelated case and a third company was prohibited from trading stocks.
Anbang's early investors included a state-owned automaker, an oil company and a mix of rural villagers and small business owners. Its multibillion-dollar string of global acquisitions raised questions about how it paid for its buying spree, including the $2 billion purchase of the Waldorf.
The company's negotiations with Kushner Cos. about a possible investment in its flagship property, 666 Fifth Avenue, prompted members of the U.S. Congress to raise ethics concerns.
Five lawmakers said in a letter to the White House the possible deal represented a "clear conflict of interest." They asked the Trump administration to confirm Kushner, who transferred his ownership stake to other family members, played no role in the negotiations.
Anbang said it raised 50 billion yuan ($8 billion) in capital in 2014 by taking on dozens of new shareholders. That increased its registered capital fivefold to 62 billion yuan ($9.5 billion), the biggest among Chinese insurers.
A prominent business magazine, Caixin, said in May 2017 at least 30 billion yuan ($4.3 billion) of that money really came from premiums paid by policyholders — a violation of insurance regulations.
Anbang denied that and accused Caixin of publishing negative information about the company and Wu after pressing it to buy advertising.
Published: Monday, April 23, 2018 @ 8:52 AM
— The aircraft engine made by a company based in the greater Cincinnati area, CFM International, is getting increasing scrutiny.
CFM late last week issued a new service bulletin to operators of CFM56-7B engines, which power the Boeing Next-Generation 737. It calls for inspections of fan blades on engines that have been in service for a long time.
Some 500 people tied to CFM and GE Aviation are involved in the inspection work.
The European Aviation Safety Agency and the Federal Aviation Administration have each issued emergency airworthiness directives calling for inspections of fan blades on CFM56-7B engines.
This has wide ramifications.
Southwest Airlines is cancelling about one percent of its flights due to the need for inspections. About 40 flights have been impacted, a media report said.
Last week, an affected Southwest Boeing 737 took off Tuesday from New York, headed for Dallas. About 20 minutes into the flight, at an altitude of about 32,500 feet, a fan blade broke off the engine and shrapnel shattered a window.
#FAA Statement (1/4): The FAA issued an Emergency Airworthiness Directive (EAD) https://t.co/NTqXpA3PY4 that requires operators to inspect fan blades on certain CFM56-7B engines within 20 days.— The FAA (@FAANews) April 20, 2018
Full FAA statement available at https://t.co/CfDPmo5EOT.
A passenger on that flight, Jennifer Riordan, 43, was sucked part of the way out of the broken window and pulled back inside by fellow passengers.
The engine in question is assembled in the GE-Evendale plant and by Safran (previously Snecma )in Villaroche, France.
It looks like the Federal Aviation Administration will require inspections of certain engines made by a Butler County, Ohio company, CFM International. https://t.co/9JzldOxXe0— Thomas Gnau (@ThomasGnau) April 19, 2018
CFM, which has offices in West Chester Twp., is a joint venture of French firm Safran and GE.
Jamie Jewell, a GE Aviation spokeswoman, said the CFM engine has been in service since 1997 and production has been gradually phasing out as GE and CFM ramp-up introduction of the new LEAP engine.
"None of that is as a result of SWA (Southwest Airlines) incident," Jewell said in an email.
The engine's fan blade is produced by Safran, but the National Transportation Safety Board is leading the investigation. Jewell said the companies do not expect to rely on the University of Dayton Research Institute (UDRI) for any post-accident engine component testing at this time.
UDRI is involved in testing of engine casings or housings to help determine how durable those components are.
CFM sent a team of technical representatives to the site to assist NTSB and government investigators in their probe of what happened on the Southwest flight.
Citing international conventions governing these investigations, Jewell said she can't comment on whether any causes have been identified in the Southwest accident.
"The NTSB is leading the accident investigation according to the ICAO (International Civil Aviation Organization) Annex 13 rules, and CFM cannot provide information about the accident or details related to it," Jewell said.
Published: Monday, April 23, 2018 @ 1:03 PM
— A Miami Twp. Applebee’s Grill and Bar restaurant property has sold for nearly $1.64 million, Montgomery County property records show.
The transaction happened Monday, with AP Dayton LLC buying the 105 N. Springboro Pike property from Cypress Grove Holdings for $1.638 million, records show.
The restaurant is on 1.07 acres.
Published: Monday, April 23, 2018 @ 10:45 AM
In a letter to the company’s board of directors, Lampert said he would buy the unit through his hedge fund. The letter notes that Kenmore, SHIP and PartsDirect have substantial value and that divesting one or more of them would enable the company to improve its debt profile and liquidity position, according to a company statement.
Shares rose more than 5 percent to $3.39 a share after the offer became known. The move would downsize Sears significantly, but it would also help stabilize the financially struggling company.
» TRENDING BUSINESS NEWS: Sears to close another store in Ohio
Lampert gave a rare interview to Vanity Fair last month — the first in-depth sit down with the leader in about 15 years. Lampert, who was interviewed in his home in Florida, talked about the company’s future and his past business decisions.
“We’re fighting to survive — that’s pretty clear,” Lampert told Vanity Fair. “I believe in what’s possible, and we’re doing things that are necessary to keep the company going …. It’s definitely not just humbled me, but it’s expanded my awareness of real issues that exist in our society…. I feel like I can make a contribution by being involved, O.K.?”
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Published: Monday, April 23, 2018 @ 10:35 AM
— Sales of single-family and condominiums reported in March by Dayton Realtors totaled 1,288, the highest monthly sales so far in 2018, according to Dayton Realtors.
“These sales figures couldn’t top last March’s numbers though, dropping one percent and missing the mark by just thirteen sales,” the association of local Realtors said in a release.
But the first three months overall of the year saw increases over the previous year in prices and sales compared to last year.
Sales volume generated by March’s activity totaled $195 million, leading to an average sale price of $151,537 and a median sale price of $130,000.
“All these figures were nearly identical to last year, with the median price hitting the exact same mark as March 2017,” the group said.
Through March, sales reached 3,042, about a one percent improvement from 2017 when 3,020 transactions occurred over the same three months.
Sales volume was put at $457 million in sales transactions so far, a jump of more four percent from 2017.
The average sale price year-to date stood at $150,378 and represented a four percent increase over 2017’s year-to-date numbers. The median sale price also grew, from $126,825 in 2017 to $128,300 through March 2018, a one percent increase.
Inventory remains a challenge, however. There were 1,877 new listings added in March, down from last year’s 1,961, and year-to-date listings saw 4,608 listings, a decrease of four percent from the figures submitted through March of 2017.