Canadian-Chinese billionaire Xiao Jianhua sentenced to 13 years in prison after secret trial in Shanghai

A Chinese-Canadian billionaire snatched in Hong Kong and taken to China in 2017 was sentenced to 13 years in prison on Friday, after he was tried in secret in Shanghai more than a month ago.

Xiao Jianhua, who was worth an estimated US$4.5-billion at the time of his disappearance, was found guilty of a number of financial crimes, including the illegal use of funds and bribery, the Shanghai No.1 Intermediate People’s Court said in a statement.

His company, Tomorrow Holdings, was also fined 55-billion yuan ($10.5-billion). The vast conglomerate has been slowly dismantled by Chinese regulators since Mr. Xiao’s kidnapping in 2017, with various parts seized by the government or forced to close.

At its peak, Tomorrow controlled dozens of companies, including banks, insurers and online financial platforms, and was worth an estimated 3-trillion yuan ($572-billion). Mr. Xiao’s ownership of Tomorrow, through a variety of intermediaries, was in violation of “national financial management laws and regulatory regulations,” the court said.

Mr. Xiao was found guilty of illegally collecting public deposits, using entrusted assets in breach of trust, illegally using funds and bribery. As well as the massive fine imposed on Tomorrow, Mr. Xiao was himself ordered to pay 6.5-million yuan ($1.2-million), and the court said it would seek to recover “illegal gains” from his various crimes.

The court praised Mr. Xiao’s admission of guilt and co-operation in “recovering stolen goods and restoring losses,” and said his “meritorious performance” deserved a more lenient punishment.

More than 99 per cent of cases in China end in a guilty verdict, and mounting a proper defence is impossible because of the politicized nature of the criminal justice system. Defendants are often advised by lawyers to seek what amounts to an informal plea deal by co-operating with prosecutors and hoping for as lenient a sentence as possible.

While allegations of corruption and illicit dealings are not uncommon in China’s cutthroat business and financial worlds, the precise reason for Mr. Xiao’s sudden and dramatic downfall remains unclear.

Some observers have speculated that the size of Tomorrow Holdings had alarmed Beijing, which has moved in recent years to shore up control over the business sector, reining in even companies as powerful as Alibaba and Tencent. Others have suggested Mr. Xiao was caught up in factional politics of some kind, as Chinese President Xi Jinping used a sweeping corruption campaign to crack down on enemies within the Communist Party.

A child prodigy who earned a scholarship at 15 to study law at the prestigious Peking University, Mr. Xiao first became successful selling computers, and cultivated a financial empire that gave him access to China’s political and business elite. But he was also dogged by accusations that he acted as an agent or facilitator for officials who wanted to make business deals without public scrutiny, something he always denied.

Just after 1 a.m. on Jan. 27, 2017, Mr. Xiao was kidnapped from a luxury hotel in Hong Kong, where he was living, and ferried across the border to mainland China.

A naturalized citizen of Canada, Mr. Xiao also held an Antiguan passport and Hong Kong residency. The Canadian government made multiple attempts to gain access to Mr. Xiao after he was detained, but to no avail. This included being barred from attending his trial in July.

That hearing took place amid tight secrecy, with Mr. Xiao’s name not appearing on any court dockets and officials refusing to comment. While multiple sources confirmed to The Globe and Mail that the trial took place on July 4, the Chinese authorities did not acknowledge it until the sentence released by the court Friday.

Nor has China ever acknowledged Mr. Xiao’s Canadian passport. At a regular news conference in Beijing on Friday, foreign ministry spokesman Wang Wenbin said that “we don’t recognize dual nationality” when asked about Mr. Xiao’s citizenship, a response that was not included in an official transcript.

Mr. Wang referred other questions about the verdict to the court’s statement.

Patricia Skinner, a spokeswoman for Global Affairs Canada, said the government was “monitoring this case closely and will continue to press for consular access to Mr. Xiao.”

“Canada made every effort to attend the July 4, 2022, trial proceedings, but our attendance was repeatedly denied by Chinese authorities,” she told The Globe. “The lack of transparency in Mr. Xiao’s legal process is very concerning, as is the ongoing lack of consular access, which prevents us from being able to assess his well-being.”

Guy Saint-Jacques, a former Canadian ambassador to China, said it was “regrettable that Canada could not have access to him during his detention and could not attend his trial.” He said he hoped Ottawa will “mount an effort with other countries to force China to recognize foreign citizenships.”

Since the release of Michael Kovrig and Michael Spavor last year after more than 1,000 days in Chinese detention, there have been hopes for a reset in relations between Ottawa and Beijing. The conclusion of Mr. Xiao’s case, while embarrassing to Canada given its complete lack of access to him, may serve to remove at least one roadblock to this, though Mr. Saint-Jacques was skeptical about how much relations could improve.

“Let’s recall that Mr. Xiao will be in jail for 13 years – and Canadian officials won’t have access to him – we have four other Canadians on death row plus a large number of other prisoners in Chinese jails,” he said. “It will also be difficult for relations to improve as we have learned a lot about China’s aggressive behaviour and foreign policy in recent years, its interference in domestic affairs in Canada and the abysmal state of human rights in China, including in Hong Kong.”

With a report from Reuters

Our Morning Update and Evening Update newsletters are written by Globe editors, giving you a concise summary of the day’s most important headlines. Sign up today.