Chinese-Canadian tycoon Xiao Jianhua jailed for 13 years, fined $11.7 billion

China sentenced Chinese-Canadian financier Xiao Jianhua to 13 years in prison and fined his company Tomorrow Holding 55 billion yuan ($AU11.7 billion), bringing an end to a long-running saga that has seen many of the tycoon’s business interests reined in since he was seized in Hong Kong more than five years ago.

Xiao was found guilty of illegally obtaining public deposits, breach of trust, bribery and the illegal use of funds, according to a ruling by the Shanghai First Intermediate People’s Court on Friday. Xiao used his financial network to offer pooled funds and sell insurance and other investment products, absorbing more than 311.6 billion yuan ($AU66.3 billion) from the public alone, according to the court.

The trial marked Xiao’s first public appearance since 2017 when he was taken from his room at the Four Seasons hotel in Hong Kong, where he had been staying for several years after fleeing China. The Hurun Report of China’s richest people said Xiao, a student leader at the time of 1989 pro-democracy protests, was part of a fortune estimated at almost $6 billion before he went missing.

The probe into Xiao and his financial network, which included more than 40 financial institutions, was part of a broader effort by authorities to root out illicit activities and ensure financial stability as confidence in the $59 trillion financial system is eroding.

Chinese regulators assumed control of nine financial firms linked to Xiao in mid-2020, after having seized control of Baoshang Bank Co. – another lender linked to the financier – a year earlier citing its “serious” credit risks.

The country’s central bank in 2018 identified Xiao’s investment conglomerate as one of several “financial holding companies” that needed to be scrutinised in their ownership structure, related transactions and sources of funding.

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President Xi Jinping’s administration is attaching greater importance to financial risk control in an economy that’s already facing headwinds from COVID-induced lockdowns and a slumping property market. Beijing in June claimed victory in its anti-corruption dragnet of financial institutions, which had probed or penalised dozens of officials to rein in risks and beef up corporate governance.