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AChineseMystery:WhoOwnsaFirmonaGlobalShoppingSpree?TheNewYorkTimes

http://nyti.ms/2c4Z9MN

AChineseMystery:
WhoOwnsa
FirmonaGlobal
ShoppingSpree?
OwnersofAnbang,aChineseinsurer
behindawaveofmultibilliondollar
deals,includerelativesandfriends
ofitspoliticallyconnectedchairman.
ByMICHAELFORSYTHEandJONATHANANSFIELD SEPT.1,2016

PingyangCountysverdanthillsstillhintatalonglostChina.Ricepaddiesand
villagessurrounditsbustlingtowns,andinthefields,farmerswadeintothemud
toplantseedlingsastheyhaveforthousandsofyears.
ItisanoddplacetofindthepeoplebehindaChinesecorporatepowerhouse
thatisturningheadsonWallStreetwithaglobaltakeoverbinge.Yettheareais
hometoatinygroupofjustsuchpeoplesmalltimemerchantsandvillagers
whohappentocontrolmultibilliondollarstakesintheAnbangInsuranceGroup,
whichownstheWaldorfAstoriainNewYorkandaportfolioofglobalnamesand
properties.
Americanregulatorsarenowaskingwhotheseshareholdersareand
whethertheyareholdingtheirstakesonbehalfofothers.
Thequestionsaddtothemysterysurroundingacompanythatseemedto
comeoutofnowhere,surprisingdealmakerswithofferstopaymorethan$30
billionforassetsaroundtheworld.

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AChineseMystery:WhoOwnsaFirmonaGlobalShoppingSpree?TheNewYorkTimes

AnbangsshoppingspreeispartofanoutflowofmoneyfromChinathathas
reshapedglobalmarketsbuthasoftenbeenshroudedinsecrecy,sometimesby
prominentChineselookingtoshifttheirwealthabroadwithoutattracting
attentionathome.Thatposesaproblemforinternationalregulatorstryingto
identifythebuyersbehindmajoracquisitionsandtoassesstheriskinessofthese
deals.
TheAnbangshareholdersinthePingyangCountyareaholdtheirstakes
throughabyzantinecollectionofholdingcompanies.Butaccordingtodozensof
interviewsandareviewofthousandsofpagesofAnbangfilingsbyTheNewYork
Times,manyofthemhavesomethingincommon:Theyarefamilymembersand
acquaintancesofWuXiaohui,Anbangschairman,anativeofthecountywho
marriedintothefamilyofDengXiaoping,Chinasparamountleaderinthe1980s
and90s.
Inmanyways,AnbangandMr.Wuappeartobearchetypalproductsof
ChinasmixoffreewheelingcapitalismandCommunistPartydominance,a
formulathathasfuelednearlyfourdecadesofuntrammeledgrowth.
Anbanggotitsstartasanautoinsurancecompanyin2004intheeastern
ChinesecityofNingbo.Foryearsitwasonlyaminorplayer.Butittookoffasit
becamemoreaggressivewithitsfinances,buyingstakesinChinesebanksand
bringinginmoneybysellinghighrisk,highyieldinvestmentfundstoordinary
Chinese.
Mr.Wu,49,aformercarsalesmanandlowlevelantismugglingofficial,led
AnbangthroughthistransformationandisnowknownasoneofChinasmost
successfulbusinessmen.Hewearstailoredsuitsandpolishedloafers,hobnobs
withthelikesofStephenA.SchwarzmanofBlackstone,andsometimesholds
courtatHarvard.
ButhedoesnotappearinAnbangsfilingsasanowner.
ItiscommoninChinaforthewealthytohavetheirsharesincompaniesheld
inothersnames.KnowninChineseasbaishoutao,orwhitegloves,thesepeople
areoftentrustedrelativesoracquaintances.Manydefendthepracticeasawayto
protecttheirprivacyinanationwhererichescanbeapoliticalliability.But
otherssaywhiteglovescanbeusedtohideillgottengainsandthwartcorruption
investigators.

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AChineseMystery:WhoOwnsaFirmonaGlobalShoppingSpree?TheNewYorkTimes

AnbangdidnotrespondwhenaskedifMr.Wuwasashareholderand
declinedtoanswerquestionsaboutitsowners.
Thecompany,aspokesmansaid,hasmultipleshareholderswhohavemade
allrequireddisclosuresunderChineselaw.Theyareamixofindividualand
institutionalshareholderswhomadeacommercialdecisiontoinvestinthe
company.Anbanghasnowgrowntobeaglobalcompanythankstothesupportof
theselongtermshareholders.
Forinvestorsandregulators,whiteglovescanmakeitdifficulttoevaluate
thefinancialhealthofaChinesebuyer.Ownershipmaybeconcentratedinthe
handsofafewpeople,posinghiddenrisks,andcompanieswithgovernment
connectionscouldbevulnerabletopoliticalshiftsorbecomemagnetsfor
corruption.
Itisveryimportantforbusinessestoknowwhotheyareultimatelydoing
businesswith,andforinvestors,whattheyareinvestingin,saidKeith
Williamson,amanagingdirectorinHongKongatAlvarez&Marsal,afirmthat
carriesoutcorporatefraudinvestigations.
ItisnotclearwhethertheshareholdersinthePingyangCountyregionare
holdinglargestakesonbehalfofanyoneelse.ButonMay27,Anbangwithdrew
itsapplicationwithNewYorkStatetobuyanIowainsurer,Fidelity&Guaranty
Life,for$1.6billion.Regulatorshadaskedabouttiesbetweenseveral
shareholderswiththesamefamilynames,saidonepersonbriefedonthematter
whospokeontheconditionofanonymity.
A$6.5billiondealforaportfolioofhotelsthatincludestheEssexHousein
NewYorkandseveralFourSeasonslocationsisawaitingresultsfromasecurity
reviewbytheAmericangovernment.InMarch,Anbangwithdrewa$14billion
bidforStarwood,theoperatorofSheratonandWestinhotels,inamovethat
surprisedWallStreet.
Thecompanycouldcomeundergreaterscrutinyasitpreparestosellshares
initslifeinsurancebusinessontheHongKongstockexchangenextyear.
Already,atleastonemajorNewYorkbasedinvestmentbankhasraisedconcerns
aboutAnbangsownershipafterstudyingitsshareholdingstructuretoevaluate
whethertohelpwithitsoverseasdeals,accordingtotwopeopleinvolvedinthe

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AChineseMystery:WhoOwnsaFirmonaGlobalShoppingSpree?TheNewYorkTimes

matterwhoaskednottobeidentifiedbecausetheprocesswasprivate.Thebank
didnotparticipateinAnbangsdeals.
Separately,theChinesemagazineCaixinreportedinMaythatChinese
regulatorswereexaminingAnbangsriskierfinancialproducts.Itisunclear
wherethatinquirystandsorwhetherAnbangsownershipstructureisbeing
investigated.
PresidentXiJinpinghaswagedacampaignagainstgraftsincetakingoffice,and
theuseofwhitegloveshasrecentlycomeunderscrutiny.Whiteglovesare
accompaniedbypowersblackhands,theCommunistPartysdisciplinary
watchdogwroteinareportlastyear.
QuestionsaboutAnbangsownerscomeasChinesecompaniesmakedeals
aroundtheworldsometimesrepresentingeffortsbyChinaspowerfultomove
moneyoutofthecountry,astheeconomyslowsandthepartytightensitsgripon
everydaylife.
Chinahasencouragedsomecapitaloutflowtoimprovetheperformanceof
itsinvestmentsandexpanditsinfluence.Butthesubjectoftheelitemoving
moneyoverseasispoliticallysensitive,raisingquestionsaboutthesourceoftheir
wealthandtheirconfidenceintheChineseeconomy.
LuoYu,thesonofaformerchiefofstaffofChinasmilitary,saidChinas
mostpoliticallypowerfulfamilieshadbeentransferringmoneyoutofthecountry
forsometime.
Theydontbelievetheywillholdontopowerlongenoughsoonerorlater
theywouldcollapse,saidMr.Luo,aformercolonelintheChineseArmywhose
youngerbrotherwasabusinesspartnerwithoneofAnbangsfounders.Sothey
transfertheirmoney.
Atitsfoundingin2004,Anbanghadanimpressivelistofpolitically
connecteddirectors.RecordsshowearlyAnbangdirectorsincludedLevinZhu,
sonofaformerprimeminister,andChenXiaolu,thesonofanarmymarshalwho
helpedbringCommunistruletoChina.
ThentherewasMr.Wu,whowasbornWuGuanghuibutwasknownasWu
Xiaohuifromayoungage.RelativessaidhegrewupinaCatholicfamilya

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AChineseMystery:WhoOwnsaFirmonaGlobalShoppingSpree?TheNewYorkTimes

crucifixsatonhisauntsdiningroomtable,andshewearsanecklacewitha
portraitoftheVirginMary.
Mr.WumarriedZhuoRan,agranddaughterofDeng,theChineseleaderwho
broughtChinaoutofthechaosoftheMaoera.Together,Mr.Wu,Ms.Zhuo,Mr.
ChenandtheirrelativesownedorranthecompaniesthatcontrolledAnbang,
accordingtocompanyfilings.
AnbangleaptontotheglobalstagewithlastyearspurchaseoftheWaldorf
AstoriaanditsabortedbidfortheStarwoodchain.Bythisyear,Anbangsassets
hadswelledto$295billion.
ItisnotclearwhatpromptedAnbangssuddeninterestinoverseasassets.
Buttheshiftcameafterareshufflingofitsownershipstructurethatalsoledtothe
injectionofmorethan$7.5billionintothecompany.
CompanydocumentsfiledwithChineseagenciesshowthatthenumberof
firmsholdingAnbangssharesjumpedto39,fromeight,oversixmonthsin2014.
Mostofthosefirmsreceivedlargeinjectionsoffunds.Atthesametime,Anbangs
capitalmorethanquintupled.
Ms.Zhuodisappearedfromtheownershiprecordsbytheendofthatyear.
ManyofMr.Wusrelativesdidaswell.Mr.WuandMr.Chenhaddisappeared
earlierfromtherecords.
Mr.Zhu,whodoesnotappeartohaveownedshares,disappearedinpaper
filingsfromAnbangsrosterofdirectorsby2009,thoughhewaslistedasa
directorononlinegovernmentfilingsaslateas2014.
Mr.Wu,Mr.ChenandMr.Zhudidnotrespondtorequestsforcomment,
andMs.Zhuocouldnotbereached.InMarch,Mr.ZhutoldChinesereporters
thathewasnotanAnbangdirector.
AnbangscurrentshareholdingfirmsarenotwellknownnamesinChina,
andsomeappeartohavebeensetupjusttoholdAnbangshares.Onelistsits
addressastheempty27thfloorofadustyBeijingofficebuilding.Twomorelist
anaddressatamaildropaboveaBeijingpostoffice.
Usingcorporatefilings,TheTimescompiledalistofnearly100peoplewho
ownsharesinthefirmsandtracedaboutadozentoPingyangCountyornearby.

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Reportersvisitedthearea,inChinaseasternZhejiangProvince,andinterviewed
dozensofresidents,includingseveralwhosenamesappearedonthelist.They
alsointerviewedanuncle,anauntandanephewofMr.Wu.
Thelattertwo,aswellasothersinthearea,saidonenamematchedthatof
hissister,WuXiaoxia.Thefamilymemberssaidseveralothernamesmatched
thoseofMr.Wusextendedkin,includingtwocousinsandothersonhismothers
sideofthefamily.ThroughtheirvariousstakesinAnbangshareholding
companies,thesepeoplecontrolastakerepresentingmorethan$17billionin
assets.
OthernamesmatchedlocalacquaintancesofMr.Wu,includingHuang
Maosheng,alocalbusinessmanwhoconfirmedinabriefphoneinterviewthathe
hadabusinessrelationshipwithMr.Wubutdeclinedtoelaborate.
OnevillageleaderandneighborsidentifiedthenamesoffourofMr.Huangs
relativesincludingsomewhomtheydescribedascommonworkersfrom
amongthoseonthelist.TheirAnbangholdingsrepresentabout$12billionin
assets.
Anotherresident,MeiXiaojing,saidtwonamesonthelistmatchedthoseof
herrelatives.AskedifsheknewMr.Wu,shesaid,Well,yes,thenendedthe
phoneconversationanddidnotrespondtosubsequentcalls.Throughmultiple
holdingcompanies,thosethreepeoplehaveastakerepresentingabout$19
billioninAnbangassets.
AsAnbangrose,sodidMr.Wusprofile.In2013Mr.Wusecuredayearlong
positionasavisitingfellowattheAsiaCenterofHarvard,joiningagrowinglistof
politicallyconnectedChinesebillionaireswithtiestoHarvard.
EzraF.Vogel,aprofessoremeritusatHarvardwhowroteabiographyof
Deng,saidhemetMr.Wuonseveraloccasions.
Hehadthisstaffofsharppeoplewhowereworkingforhim,Mr.Vogel
said.Itseemsthattheyweredoingthedetailwork,andhewasthefriendlyman
supplyingtheconnections.
MichaelForsythereportedfromHongKong,andJonathanAnsfieldfromWenzhou,
China.MichaelCorkerycontributedreportingfromNewYork.Researchwas

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AChineseMystery:WhoOwnsaFirmonaGlobalShoppingSpree?TheNewYorkTimes

contributedbyKikiZhaoandOwenGuofromWenzhou,andYufanHuangand
ZhangTiantianfromBeijing.
:

AversionofthisarticleappearsinprintonSeptember2,2016,onpageA1oftheNewYorkeditionwith
theheadline:ScrutinyonItsOwnershipTripsUpaChineseGiant.

2016TheNewYorkTimesCompany

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