Missing tycoon Xiao Jianhua was due to appear in a Shanghai courtroom on Monday, more than five years after the billionaire financier was abducted from a Hong Kong hotel by Chinese security guards.
The trial will be the first time Xiao, 50, a Chinese-born Canadian citizen with ties to the upper echelons of Beijing’s political elite, has appeared in public.
He is expected to face bribery-related charges after his Tomorrow Group collapsed following a debt-fueled takeover by a group of sprawling Chinese conglomerates.
The Canadian embassy in Beijing said it was aware that Xiao’s trial would take place on Monday, but did not elaborate on the details of the case due to “confidentiality concerns”.
“Canadian consular officials are closely monitoring this case, providing consular services to his family and continuing to press for consular access,” the statement said.
Xiao’s abduction from the Four Seasons in Hong Kong in January 2017 sent shockwaves through the city. Before his fall, he was an enigmatic merchant who helped organize the business affairs of some of China’s most powerful families.
The stunning extrajudicial operation by Beijing’s agents served as a cautionary tale for China’s business elite, many of whom, including tech titans such as Jack Ma, have homes in Hong Kong.
The Financial Times reported in 2018 that since his detention, Xiao had been in Shanghai helping authorities as they investigated a complex web of assets and interests in his financial and investment conglomerate.
Xiao’s treatment by the Chinese courts will be closely watched for the severity of punishment or the degree of mercy offered for his assistance. The country’s criminal courts have a conviction rate of over 99 percent.
His case will also be heard amid greater momentum in President Xi Jinping’s nearly decade-long crackdown on corruption in China’s government and business environment.
People involved in restructuring talks with Tomorrow Group told the FT in May that Xiao’s wife, Zhou Hongwen, was in Canada and had handled some of the group’s asset sales.
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While Xiao has been kept out of the public eye, the remnants of his business empire have mostly been broken up by authorities through confiscations and restructuring. Many of them have been converted into much smaller enterprises or remain on the verge of bankruptcy.
In 2019, Chinese authorities took control of Baoshang Bank, one of the most important financial units at the heart of the Xiao empire, citing “serious credit risks.”
Baoshang was declared bankrupt and turned into a smaller bank that now operates only in its hometown in Inner Mongolia. Xiao’s use of the bank was seen as a warning to China’s financial system as it collapsed after over-lending to companies controlled by the Tomorrow Group.
In 2020, regulators seized at least nine more financial institutions, including trusts and brokerages linked to Tomorrow Group, and extended the acquisition period for a second year. All have since been in restructuring or headed for bankruptcy.
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