Kidnapped Canadian billionaire Xiao Jianhua will face trial in Shanghai court

Missing tycoon Xiao Jianhua was due to appear in a Shanghai court on Monday, more than five years after the billionaire financier was snatched from a Hong Kong hotel by Chinese security agents.

The trial will be the first time Xiao, 50, a Canadian citizen of Chinese descent with ties to the upper echelons of the political elite in Beijing, has appeared in public.

He is set to face corruption-related charges after his Tomorrow Group collapsed following a debt-fueled acquisition spree by a group of expansive Chinese conglomerates.

The Canadian Embassy in Beijing said it was aware that Xiao’s trial would take place on Monday, but did not provide details of the case due to “confidentiality considerations”.

“Canadian consular officials are following this matter closely, providing consular services to his family and continuing to press for consular access,” he said.

Xiao’s abduction from the Four Seasons in Hong Kong in January 2017 sent shock waves through the city. Before his downfall, he had been an enigmatic negotiator who helped organize the business affairs of some of China’s most powerful families.

The astonishing extrajudicial operation by Beijing agents has 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 has been in Shanghai assisting authorities as they examine a complex web of assets and interests in his financial and investment conglomerate.

Xiao’s treatment by Chinese courts will be closely watched for the severity of the punishment or the degree of leniency offered for his help. The country’s criminal courts have a conviction rate of over 99%.

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 landscape.

People who have engaged in restructuring talks with Tomorrow Group told the FT in May that Xiao’s wife, Zhou Hongwen, was in Canada and handled some of the group’s asset disposals.

While Xiao has been kept out of the public eye, the remnants of his business empire have mostly been dismantled by authorities through foreclosures and restructuring. Much of it has been reorganized into much smaller companies, or remains on the verge of bankruptcy.

In 2019, Chinese authorities took control of Baoshang Bank, one of the most important financial branches at the heart of Xiao’s empire, citing “serious credit risks”.

Baoshang was declared bankrupt and turned into a smaller bank that now operates only in its hometown of Inner Mongolia. Xiao’s use of the bank was seen as a warning to China’s financial system, as it collapsed after excessive lending to businesses controlled by Tomorrow Group.

In 2020, regulators seized at least nine other financial institutions, including trusts and brokerages, linked to Tomorrow Group, and extended the takeover period for a second year. All have since been undergoing restructuring or are on the verge of bankruptcy.

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