Three years after Xiao Jianhua was snatched from a luxury hotel in Hong Kong, Beijing is making it clear that his style of freewheeling finance is a thing of the past.
Xiao Jianhua was once a trusted financier to China’s ruling elite who came to represent an era of unbridled capitalism.
But three years ago, he was snatched from a Hong Kong luxury hotel and disappeared into Chinese custody. Now, the empire he built is being dismantled by the authorities in Beijing, as China sends a strong message that its era of debt-fueled excess is over.
On Friday, two regulators announced coordinated moves to seize companies worth hundreds of billions of dollars tied to Tomorrow Group, the umbrella company that Mr. Xiao controlled for more than two decades.
China’s banking and insurance regulator said it had taken over four insurers and two trust firms connected to Tomorrow Group, while the securities regulator said it had seized control of two securities firms and a futures company, accusing the businesses of providing misleading information about their shareholders and controller.
In staging the takeovers, China’s top leadership is bringing to heel a key figure from a time of freewheeling finance in which wealthy executives used their political connections to build huge companies that scooped up trophy assets at home and abroad. But the move also risks a public showdown with a tycoon who knows about the secret wealth of people in China’s ruling class.
In many ways, the fate of Mr. Xiao and his empire was sealed in the early hours of Jan. 27,2017, when he was whisked out of the Four Seasons Hotel in Hong Kong in a wheelchair by a dozen men and taken into police custody in mainland China.
Since then, there has been no official word about his whereabouts, though people familiar with the situation said that he was under house arrest. On Saturday, Tomorrow Group confirmed for the first time that Mr. Xiao was on the mainland, saying that he was cooperating with the government as it restructured the conglomerate.
Long before China tightened its grip on Hong Kong with the security law it imposed last month, Mr. Xiao’s disappearance shattered the illusion that the semiautonomous territory’s business community was beyond the reach of the Chinese authorities. It also sent a chill through China’s political class, already set on edge by the tough anticorruption campaign waged by Xi Jinping, the country’s leader.
For years, Mr. Xiao’s Tomorrow Group and its constellation of companies have been a source of speculation and mystery, because the ultimate ownership was hidden behind layers of shell companies.
