Missing tycoon Xiao Jianhua was scheduled to face a Shanghai courtroom on Monday, more than five years after the billionaire financier was snatched from a Hong Kong hotel by Chinese security guards.
The trial will be the first time that the 50-year-old Xiao, a Chinese-born Canadian citizen with connections to the top echelons of the political elite in Beijing, has appeared in public.
He is expected to face charges related to graft after his Tomorrow Group collapsed following a debt-fuelled acquisition binge by a group of expansive Chinese conglomerates.
Canada’s embassy in Beijing said that it was aware that Xiao’s trial would take place on Monday but did not elaborate on the details of the case because of “privacy considerations”.
“Canadian consular officials are monitoring this case closely, providing consular services to his family and continue to press for consular access,” it said.
Xiao’s abduction from Hong Kong’s Four Seasons in January 2017 sent shockwaves through the city. Before his downfall, he had been an enigmatic dealmaker who helped arrange the business affairs of some of China’s most powerful families.
The stunning extrajudicial operation by Beijing’s agents has served as a cautionary tale to the Chinese business elite, many of whom, including technology 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 assisting authorities as they pore over a complex network of assets and interests across his financial and investment conglomerate.
Xiao’s treatment by China’s courts will be closely watched for the severity of the punishment, or the degree of mercy offered for his assistance. The country’s criminal courts have a conviction rate higher than 99 per cent.
His case will also be heard amid greater momentum in President Xi Jinping’s nearly decade-long crackdown on corruption across China’s government and business landscape.
People who engaged in restructuring talks with Tomorrow Group told the FT in May that Xiao’s wife, Zhou Hongwen, was in Canada and had been dealing with some of the group’s asset disposals.
While Xiao has been kept away from the public, the remnants of his business empire have mostly been dismantled by authorities through seizures and restructuring. Much of it has been revamped into businesses of much smaller sizes, or remain on the brink of declaring bankruptcy.
In 2019, Chinese authorities seized control of Baoshang Bank, one of the most important financial arms at the heart of Xiao’s empire, citing “severe credit risks”.
Baoshang was declared bankrupt and turned into a smaller bank that now only operates in its hometown in Inner Mongolia. Xiao’s use of the bank has been viewed as a warning for China’s financial system because it collapsed after excessive lending to companies controlled by Tomorrow Group.
Regulators in 2020 seized at least a further nine financial institutions, including trusts and brokerages, linked to Tomorrow Group, and extended the takeover period into a second year. All have since been under restructuring or leaning towards bankruptcy.