Xinhua Insurance Executives Missing and Sentenced, with Involvement of Numerous Authorities behind the Scenes

Following the sentencing of the former Chairman of Xinhua Insurance at the end of last year, the current chairman and the general manager of its subsidiary Xinhua Assets have also gone missing. The Chinese Communist Party’s so-called financial anti-corruption campaign has stirred up various interest groups.

Xinhua Assets, the asset management company under Xinhua Insurance, saw its current general manager Zhang Chi suddenly lose contact with the outside world recently. Born in 1965, Zhang Chi has 30 years of experience in the financial industry. He joined Xinhua Assets in 2011 as the deputy general manager and was appointed as the general manager in October 2019.

Speculations in the market suggest that Zhang Chi’s disappearance is related to the former Chairman of Xinhua Insurance, Li Quan, with whom he worked together for over a decade. When Zhang Chi joined Xinhua Insurance, he was the deputy to Li Quan.

Li Quan, two years older than Zhang Chi, has extensive experience in investment management and is familiar with the capital market. He joined Xinhua Insurance in 2010 and served as the CEO of Xinhua Assets.

In 2019, Li Quan was promoted to the chairman of Xinhua Insurance. In September 2022, the board of directors of Xinhua Insurance chose Li Quan as chairman, and his appointment as chairman was approved by the National Financial Regulatory Authority of China in April 2023. However, in August of the same year, Xinhua Insurance announced that Li Quan resigned from all positions, including chairman, executive director, and CEO, citing “age reasons.” It was quite suspicious that Li Quan voluntarily resigned after only four months as chairman.

It was not until April 12 of this year that Chinese media revealed Li Quan’s disappearance. The disappearances of both Li and Zhang occurred within a month and a half of each other.

In China under the rule of the Chinese Communist Party, disappearance often signifies being “under investigation.” Li Quan’s predecessor as chairman, Wan Feng, recently went through the process from disappearance to investigation, and eventually to sentencing.

Wan Feng served as the chairman of Xinhua Insurance from 2016 to 2019. He went missing in December 2022, three years after leaving Xinhua Insurance. Six months after his disappearance, Wan Feng was officially announced to be under investigation.

At the end of last year, Wan Feng was sentenced to six years and six months in prison for bribery. The court judgment stated that Wan Feng used his position to benefit others in project procurement, project contracting, job promotion, and received illegal cash and shopping cards totaling over 12.09 million yuan (1.67 million dollars), with 10 million yuan (1.38 million dollars) being an attempted bribe.

The fact that Wan Feng was only convicted of accepting bribes worth 2.09 million yuan (290,000 dollars) raised eyebrows. Wan Feng received a hefty salary during his time as chairman of Xinhua Insurance, reaching 6.174 million yuan (850,000 dollars) in 2017. The revealed amount of bribe money in the court judgment was equivalent to only a third of Wan Feng’s annual salary, indicating hidden complexities behind the case.

Apart from the series of high-level incidents, Xinhua Assets received a hefty fine of 4.51 million yuan (623,000 dollars) at the end of last year. 4.1 million yuan (566,000 dollars) was imposed on Xinhua Assets, and another 410,000 yuan (57,000 dollars) on six individuals related to the company. The penal decisions of the National Financial Supervisory Administration of China revealed nine illegal and irregularities involving Xinhua Assets.

With the slowdown in the Chinese economy and the collapse of the real estate industry, the past two years have seen intense and high-pressure anti-corruption measures in the financial sector. According to incomplete statistics, in 2022, 77 officials in the Chinese financial system were notified of inspections, and in 2023, the number rose to 104 officials, covering areas such as insurance, securities, and banking.

This so-called “financial anti-corruption” campaign continues this year. Bai Tianhui, former general manager of China Huarong International Holdings Limited, one of China’s largest state-owned asset management companies, was sentenced to death by the Tianjin Intermediate People’s Court on May 28th. The court accused him of accepting bribes worth 1.108 billion yuan (153 million dollars).

Regarding the ongoing “financial anti-corruption” campaign, former Beijing lawyer and chairman of the Canada Federation, Lai Jianping, explained to Da Ji Yuan that authorities have three intentions. Firstly, it is for economic reasons, as authorities rely on huge fines and confiscations to supplement the national treasury; secondly, it is for political stability, to prevent excessive corruption in the financial sector from leading to economic collapse; and thirdly, it is for political purification through financial anti-corruption.

Lai Jianping further explained that behind every financial institution, there are backers, and the officials in power and their backers have a symbiotic relationship. Therefore, the actual purpose of financial anti-corruption is for the top echelons to target the masters by attacking the dogs.

Xinhua Life Insurance Co., Ltd., known as Xinhua Insurance, is one of the top ten insurance companies in China. According to its official website, Xinhua Insurance was established in 1996, with total assets exceeding 1.4 trillion yuan (approximately 200 billion dollars). It is listed in mainland China and Hong Kong and is one of the world’s top 500 enterprises.

Liu Leyi, the son of former member of the Politburo Standing Committee of the Chinese Communist Party, Liu Yunshan, was once a non-executive director of Xinhua Insurance and resigned from the position in July 2015. At that time, China had just experienced a stock market crash due to the continued plunge in the Shanghai and Shenzhen stock markets. The authorities cracked down on those responsible for manipulating the stock market, and Liu Leyi was suspected to be one of them.

Swiss insurance company Zurich Insurance Group had a stake in Xinhua Insurance. According to The Daily Telegraph of the UK in October 2013, court documents and related records obtained by the newspaper revealed that Zurich Insurance successfully acquired shares in Xinhua Insurance with the mediation of Li Xiaolin, the daughter of former Chinese Premier Li Peng. The reports further stated that Zurich Insurance transferred 16.9 million dollars to an offshore account as a gesture of goodwill at that time.

However, Li Xiaolin denied these claims. The statement released by China Power International Development, where Li Xiaolin serves as chairman, stated that she had no personal dealings with any insurance company and did not know anyone from any insurance company.

At its inception, Xinhua Insurance had 15 shareholders, but after continuous benefit reshuffling, only one shareholder, Baowu Steel Group, remains. Baowu Group, headquartered in Shanghai with close ties to the Shanghai government, falls within the interest sphere of the former Chinese Communist Party leader Jiang Zemin’s faction.

Currently, the controlling shareholder of Xinhua Insurance is the Central Huijin Investment Company. According to Xinhua Insurance’s latest financial report for 2023, the largest shareholder of the company is Central Huijin Investment Limited Liability Company, holding a stake of 31.34%, and the second-largest shareholder is China Baowu Steel Group Co., Ltd., with a 12.09% stake.

Central Huijin is a state-owned sole proprietorship established with the approval of the State Council of China, and all members of the board of directors and board of supervisors are appointed by the State Council of China. The company exercises the rights and obligations of the state in providing capital to key financial enterprises, such as state-owned commercial banks.

Xinhua Insurance is just a private enterprise, but the influential individuals behind it and the complex web of interests are indicative of the larger picture.