The Waldorf Astoria is now controlled by Beijing
The Chinese government on Friday seized control of insurance giant Anbang — the free-spending owner of New York’s Waldorf Astoria hotel — and said its chairman had been prosecuted, dramatically illustrating Beijing’s willingness to crack down on financial risk.
Anbang had violated laws and regulations which “may seriously endanger the solvency of the company,” the China Insurance Regulatory Commission (CIRC) said in a statement announcing the seizure, without giving details.
The CIRC also said Anbang’s chairman and key shareholder, Wu Xiaohui, had been prosecuted for economic crimes. Wu was arrested in June as troubles mounted for one of China’s most aggressive buyers of overseas assets.
Anbang is best known in the United States for its $1.95 billion acquisition of the Waldorf Astoria in 2014. As reported by The Post, the Park Avenue landmark is undergoing a pricey, three-year renovation that will reduce its hotel rooms by 1,000 as it converts most of the space to condos.
On Friday, sources close to Anbang said demolition ahead of the renovation, which began in December under Aecom Tishman, is continuing.
In a Friday statement, Anbang told The Post that its “operations are stable,” that it will stay a private company, and that it remains “fully committed to our overseas, subsidiaries, businesses and investments.” A spokeswoman declined to comment specifically on whether the Waldorf could be impacted by Beijing’s takeover.
Anbang had also shelled out $6.5 billion for Strategic Hotels and Resorts, whose assets include the JW Marriott Essex House on Central Park South and the Four Seasons hotel in Washington, DC.
The Shanghai prosecutors office said in a statement Friday that Wu had recently been charged with fundraising fraud and abuse of his position, and that his case had been forwarded to the city’s intermediate court for prosecution.
It was not immediately clear what triggered the move.
Three insurance industry insiders said they were not surprised by the move, since Anbang had been in the cross hairs of the government. But they said they believed it had more to do with Anbang’s behavior than systemic financial risks.
“This appears to be an unprecedented takeover — a Chinese-style hostile takeover,” said Scott Kennedy, director of the Project on Chinese Business & Political Economy at the Center for Strategic and International Studies in Washington.
“The Chinese government doesn’t want to have a company default on foreign debt and it also wants to teach a lesson to other Chinese business people that the Party is in charge.”
Calls to Wu Xiaohui’s personal phone numbers were either disconnected or unanswered.
Under Wu, Anbang was among China’s most active overseas investors after the government liberalized offshore investment rules earlier this decade.
But it has faced increasing pushback in its offshore deal-making amid a broader decline in Chinese outbound acquisitions. Beijing has strengthened curbs on capital outflows after China’s leadership vowed to curb risk in its financial system.
During the government takeover of Anbang Group, which will last for one year starting Friday, the company will be managed by a group of officials from the CIRC, the central bank and other key financial regulators and government bodies.
The group will seek to undertake an equity restructuring of the insurance giant, even as it keeps Anbang operating as usual, protecting the rights and interests of its consumers and stakeholders, the CIRC said.
With Reuters