China executed a senior financial manager, Bai Tianhui, on Tuesday for having accepted bribes worth 133 million euros during his tenure as CEO of Huarong International Holdings Limited. This was the Hong Kong-based international arm of Huarong, one of China’s big four problem asset managers for two decades.
The financial executive was convicted last year in Tianjin. After losing the appeal in the provincial high court, the sentence was reviewed and confirmed in the Supreme People’s Court in Beijing.
Bai was able to say goodbye to his relatives before being executed in Tianjin, by an undisclosed procedure. Previously, most of his assets had been confiscated to compensate the state.
The day chosen for the execution – 24 hours after the announcement of the results of the legislative elections in Hong Kong – sends a message to the financial center. It is no longer and cannot be a joke when crimes affect mainland China. And of course, the fight against corruption affects “tigers as well as flies.” just as President Xi Jinping likes to say.
Huge losses
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The convicted man headed the international arm of Huarong, based in Hong Kong
Huarong, in addition, had its headquarters in the capital of the People’s Republic of China, where the prisoner was from. The company was one of the four giants in charge of managing toxic assets and difficult-to-collect debts of public banks. In 2014, it was privatized by more than 35% and an undetermined percentage of shares passed into the hands of American investment firms, Warburg Pincus and Goldman Sachs. It also began trading on the Hong Kong Stock Exchange.
The result of privatization was catastrophic and, six or seven years later, the state had to spend many billions of euros (several times what it had pocketed through privatization) to save it from bankruptcy. Finally, the gigantic public conglomerate CITIC, a small shareholder in the firm, had to completely absorb it, converting it into its Chinese subsidiary CITIC Financial Asset Management, which still operates.
In reviewing Bai Tuanhin’s case, the Supreme People’s Court concluded that Bai had taken advantage of his various positions between 2014 and 2018 to benefit certain individuals and companies in the acquisition of assets and in obtaining financing in exchange for excessive bribes, “causing great harm to the interests of the State and the people.”
Gou Zhongwen
The day before, the Sports Minister was sentenced to capital punishment for bribery
The death penalty for white collar crimes is rare in China and it is even more exceptional that execution is carried out, as in this case. Normally the death penalty is commuted to life imprisonment if there is no recidivism for two years.
For example, the former Minister of Agriculture, Tang Renjian, who was sentenced to capital punishment for corruption a few months ago, is counting on this. Or Liu Liange, former president of the Bank of China, who was sentenced to death a year ago for the same crime and who could also benefit from the same commutation.
Gou Zhongwen, former vice mayor of Beijing, Minister of Sports of China between 2009 and 2024 and former president of its Olympic Committee, heard the death sentence in Jiangsu on Monday.
Or just yesterday, Gou Zhongwen, former vice mayor of Beijing and the highest official in Chinese sports between 2009 and 2024, also sentenced to the death penalty after it was proven that he accepted bribes equivalent to 29 million euros during his performance in this last position, equivalent to that of Minister of Sports.
Returning to the execution of Bai Tianhui, it must be said that it adds to the series of scandals that have marked Huarong in recent years. The best known case was that of his own boss, Lai Xiaomin. The former president of the conglomerate was arrested in 2018 and executed in 2021 for accepting bribes of more than 1,788 million yuan (237 million euros).
As noted, Huarong was one of China’s four ‘bad banks’, founded two years after the 1997 Asian financial crisis. Its goal was to clean up the balance sheet of the Chinese banking system. However, shortly after Lai became president of the public group, in 2012, it opened up and diversified and began investing in high-risk assets.
As a result, Huarong – whose majority shareholder remained the Ministry of Finance – had liabilities of more than €200 billion at the end of 2021, so it had to be rescued.
(Above left, image of Gou Zhongwen, sentenced to death this Monday, when he received his counterpart Miquel Iceta as Sports Minister, during the Beijing Winter Olympic Games in 2022. Gou also presided over the Chinese Olympic Committee).
