CHINA FRAUD CASE HITS HOME
Billions in B.C. real estate affected
China says the former chairman of Beijing-based Anbang Insurance Group defrauded mom-and-pop retail investors of more than US$10 billion and the company used that money to buy trophy assets overseas, including prime office towers in downtown Vancouver and a major B.C. seniors’ care company.
The allegation puts these B.C. deals, which each exceeded $1 billion, into the world of what is emerging as one of China’s biggest financial crime trials with pundits trying to parse out Beijing’s desire to crack down on rising debt levels versus its political motivations for going after Wu Xiaohui and Anbang.
“It’s so interesting,” says Christine Duhaime, a Vancouver-based lawyer.
“Goodness knows what it means for the Vancouver assets other than there will be a fire sale to get rid of them.”
She’s been watching Anbang ’s activities in Vancouver since it first got the green light from the federal government in 2016 to buy the Bentall Centre office towers and retail mall in two transactions for over $1 billion, even though it wasn’t clear how Ottawa was able to tick off basic ownership questions about Anbang when no one else in the world could. She also drew attention to the speed at which Anbang’s $1-billion-plus purchase of Vancouver-based Retirement Concepts, a seniors’ care company, was approved by the federal government in 2017, considering the layers of ownership and the sheer task of translating verifying supporting documents from Chinese to English.
Now, the optics of what is being suggested by the Chinese government’s allegations against Wu and Anbang should be a wake-up call, says Alesia Nahirny, executive director of Transparency International Canada.
Nahirny says she wouldn’t categorize Anbang’s funds as necessarily being illicit. That’s normally a description reserved for money that is tied to nefarious and organized crime, but she says it’s a problem if Anbang has been diverting funds into deals in Canada that it raised by aggressively promoting risky, wealth management products to unsophisticated investors in China.
“(Money from) practices that happen elsewhere is coming to us. We are connected to it. If we are not putting the proper measures in place, we are complicit,” says Nahirny.
Since a 2015 expose in the New York Times about “hidden global wealth” pouring into Manhattan’s most elite condo buildings, there’s been some attention on a “growing proportion” of wealthy foreigners, who have been the subject of government inquiries in their home countries for cases involving white-collar housing or environmental violations and financial fraud, buying assets in North America with few questions asked.
Anbang has distanced itself from Wu’s trial in Shanghai court, but it’s fair to say deal makers around the world are waiting to see what Anbang will sell. Musings began in 2016 when Wu was first arrested by Chinese authorities and escalated when Beijing ’s insurance regulator took over control of Anbang in February 2017
We are connected to it. If we are not putting the proper measures in place, we are complicit.
In Vancouver, commercial real estate broker Jim Szabo, vicechairman at CBRE Ltd., who was involved with the sale of both the Bentall Centre property and the Fairmont Hotel at YVR to Anbangrelated companies, said in an email that “with China putting in regulators, we only know what we have read in the press.”
While the B.C. government recently said it is asking questions about how care for seniors will be maintained at Retirement Concepts, Mike Old, co-ordinator of policy and planning for the Hospital Employees’ Union, said, “it’s prudent to prepare for fallout,” which could include Anbang “extracting revenue” by selling off some of its nursing homes or contracting out work.
“There has been a lack of transparency (for parties) on both sides of the Pacific. On that side, it has been for small investors. On this side, it’s average workers and seniors.”