UPDATED: Thursday, April 27 at 8:32 a.m.: Chinese social media platform WeChat erupted Wednesday with reports that Wu Xiaohui, chairman of Anbang Insurance Group, has been detained by authorities in Beijing.
Chinese authorities have also halted all of the insurance giant’s overseas investment, according to reports early on Wednesday.
According to the media reports, the investigation into Wu is connected to a $14.5 billion loan the Anbang chairman allegedly obtained illegally from Minsheng Bank. Wu used the illegal loan to invest in the stock market, the reports say. He may also have partly funded Anbang’s acquisitions with the loan, according to the reports.
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In January 2015, Reuters reported that Anbang had upped its stake in Mingsheng, the country’s largest private lender, to nearly 20 percent.
Sources told The Real Deal the investigation into Wu was widely expected and came as the Chinese government has been clamping down on foreign investments.
Authorities have been looking into Anbang’s activities over the past few months, sources said, and two weeks ago, China’s corruption watchdog questioned its top insurance regulator, Xiang Junbo, over suspicion of “severe disciplinary violations,” according to the Financial Times.
In a statement to TRD on Thursday, Anbang denied that Wu had been detained and said its business operations were continuing as usual.
Anbang , which paid $1.95 billion to buy the Waldorf-Astoria Hotel, has close ties to the Chinese government. The company has been investing heavily in U.S. real estate, but has pulled out of several major deals in recent months. It was one of the leading suitors for the Starwood Hotels & Resorts portfolio, but backed out at the last minute. It was also in advanced talks to invest in Kushner Companies’ 666 Fifth Avenue but pulled out of the deal.
Editor’s note: This story was updated to include a denial by Anbang.