SHANGHAI/BEIJING (Reuters) - The former chairman of Anbang Insurance Group Co Ltd [ANBANG.UL], Wu Xiaohui, contested all charges against him in a high-profile trial that began in Shanghai on Wednesday, part of Beijing’s crackdown on profligate investing by conglomerates.

FILE PHOTO: Chairman of Anbang Insurance Group Wu Xiaohui attends the China Development Forum in Beijing, China March 18, 2017. REUTERS/Thomas Peter/File Photo

Wu’s trial for suspected economic crimes, including fundraising fraud and embezzlement, comes a month after the government seized control of Anbang, owner of New York’s iconic Waldorf Astoria hotel and other marquee properties around the world.

Founded in 2004, Anbang became one of the most aggressive investors behind a wave of overseas acquisitions by China’s firms in recent years that have attracted the attention of global regulators and investors.

Its downfall was swift, as was Wu’s, highlighting Beijing’s resolve in a sweeping campaign to deleverage the economy, cut financial risk and discourage what it sees as profligate investing by large companies.

The Shanghai No. 1 Intermediate People’s Court issued a stream of updates on the case throughout Wednesday with alleged details that provide a rare glimpse into the conglomerate’s complex ownership structure and fundraising activities.

“The prosecutor said the defendant Wu Xiaohui fraudulently and illegally raised money for the purpose of illegally taking assets, and the amount was especially huge; he (also) took advantage of his position to illegally take company capital as his own, and the amount was huge,” it said.

Prosecutors in the case found that in 2011 Wu had concealed his control over Anbang and faked financial statements to cheat China’s insurance regulator for approvals to sell insurance products to the public for investment, the court said.

That July, Wu broke the rules by telling his company to sell investment-purpose insurance products that exceeded the approved amount, the court said.

By Jan. 5, 2017, it said, Anbang had oversold 724 billion yuan ($115 billion) of insurance products and transferred some of the funds to his other companies for investment, debt repayment and personal spending.

All told, Wu was accused of swindling 65.2 billion yuan.

Wu raised objections during the proceedings, contesting alleged facts and charges, according to the court statements.

He claimed he did not understand the law and did not know whether his behavior constituted a crime. He also believed he had not violated regulatory restrictions.

Wu, known for his hard-driving, hands-on approach and single-minded ambition, has been detained since June, sources have said.

In a twist to the court case, Wu’s sister testified against him.

She said that Wu controlled more than 200 companies and used 38 of them to control Anbang Group, the court said. She also said that Wu registered shell companies in the names of relatives to hide his control.

Wu responded that he didn’t control some of the entities, and that he was unaware there were so many, according to the court account.

The crimes that Wu has been accused of are punishable by up to life imprisonment, according to the criminal code.

EQUITY RESTRUCTURING

Anbang said in a statement on Wednesday that it had ample cashflow and its operations were stable following its takeover by Beijing.

The court said parliamentarians, journalists and others, including family members of Wu, attended the hearing.

After a spate of high-profile deals worth more than $30 billion, Anbang began to run into roadblocks even before Wu’s detention, failing to close on a handful of investments and facing criticism over its opaque shareholding structure.

On Feb. 23, the government took control of Anbang Group for a period of a year. During the takeover, the company would be managed by officials from the China Insurance Regulatory Commission (CIRC), the central bank and other key financial regulators and government bodies.

It is unclear how Wu’s trial will affect Anbang or its ability to conduct business, but regulators have said they will undertake an equity restructuring of the insurer and protect the rights and interests of its consumers and stakeholders.

Private conglomerates in China have recently attracted regulatory attention for their aggressive acquisitions of overseas assets.

Some insurers were punished for using client money derived from high-yield investment products sold to consumers for risky investments. This has particularly jarred with authorities concerned about an economy over-reliant on credit. ($1 = 6.2775 Chinese yuan)