A Chinese court accused the former head of troubled Anbang Insurance Group of embezzling more than $10 billion as it opened his high-profile fraud trial one month after authorities seized control of the big-spending conglomerate.

China's insurance regulator announced an unprecedented takeover of Anbang in February, saying fallen chairman Wu Xiaohui would be prosecuted for financial crimes as the government moves aggressively to prevent heavily-indebted large private companies from collapsing and triggering a financial crisis.

Wu's trial began Wednesday morning at the Shanghai No. 1 Intermediate Court, where prosecutors accused Wu of defrauding Anbang of 65.25 billion yuan ($10.4 billion).

The funds were transferred to companies he personally controlled for investment overseas, to pay down debts, or "personally squandered," the court said on an official social-media account.

The court also was told that Anbang had sold investment products that exceeded allowable fund-raising amounts by a whopping 723.9 billion yuan.

"The accused Wu Xiaohui said that he did not understand the law and did not know that these actions constituted crimes," the court said.

It was not clear what plea was entered by Wu, who was pictured in the dock looking calm in a suit with no tie.

The government's swoop on Anbang was its most aggressive move yet to rein in politically-connected conglomerates like Anbang that grew rapidly and launched a wave of splashy multi-billion-dollar overseas investments fuelled by debt.

The court gave no indication when the trial would conclude, but such proceedings are often wrapped up within a day, especially in sensitive cases that the government does not want dragged out.

The government of President Xi Jinping, who has dramatically strengthened his grip on power recently, has made cleaning up financial risks a top national priority.

The highly unusual commandeering of Anbang signalled deep official concern over the Beijing-based company's financial situation and appeared to confirm that toxic financial risks lurked in the world's second-largest economy.

Wu's situation marks a startling fall from grace for a man who reportedly married a granddaughter of the late Chinese leader Deng Xiaoping -- a sign that even political connections won't guarantee immunity.

- 'Grey Rhinos' -

Acquisitive private companies such as Anbang, HNA, Fosun and Wanda were in the vanguard of an officially-encouraged surge in multi-billion-dollar overseas acquisitions that netted everything from European football clubs to foreign hotel chains and movie studios.

But authorities have become increasingly alarmed by the conglomerates' murky webs of subsidiaries and debt and their potential threat to China's economy.

The four firms are referred to as "grey rhinos" -- plodding financial beasts that could charge quickly, with damaging systemic results.

In response, the government has for more than a year implemented ever-tighter controls to curb excessive debt and "irrational" investments overseas.

Established in 2004, Anbang grew rapidly from a property insurer into a financial services powerhouse, making waves in 2014 by buying New York's landmark Waldorf Astoria hotel for $1.95 billion.

In 2015, it bought US insurer Fidelity & Guaranty Life for $1.6 billion and, later, insurers in South Korea and the Netherlands. It also made a failed $14 billion bid for the Starwood hotels chain.

It also was in aborted talks with Donald Trump's son-in-law and adviser Jared Kushner to redevelop a Manhattan office tower, Bloomberg News reported last year.

Regulators have said some unspecified Anbang holdings would be sold off and that the company takeover would last one year but could be extended if needed.

Earlier in March, China unveiled plans to merge its banking and insurance regulators to tighten supervision of financial risks.

dma/qan

FOSUN INTERNATIONAL

HAINAN AIRLINES - HNA GROUP

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