A secret multi-million dollar deal involving Zurich Insurance to carve up China’s insurance market, brokered by the daughter of that country’s former prime minister, is now under investigation for corruption.
The deal guaranteed Zurich Insurance a huge stake in a major Chinese insurance company – at a time when foreign firms were barred from investing in the sector.
The deal – which came to light during a court case in the United States – was cut at the highest level of the Communist party by Li Peng, the daughter of then Prime Minister Peng.
Transcripts and documents obtained by the Telegraph in London, England, provide an insight into the hurdles western businesses have had to leap to gain entrée to the Chinese market – and more importantly, the relationship between money and power in Beijing.
The revelations come amid the anti-corruption campaign currently being waged in China, as investigators are looking into alleged malpractice at pharmaceutical giant GlaxoSmithKline and Danone, the French food group.
Documents show that in 1995 Li Xiaolin introduced executives from Zurich to three Chinese businessmen who held majority takes in New China Life – the country’s largest private insurance company. (continued.)
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In return for a $16.9 million payment into an offshore Credit Suisse account in the Bahamas, they agreed to sell Zurich almost one-quarter of the company – a full four years before it was legal for foreign firms to make investments.
Court documents obtained by the Telegraph show the money from Zurich was then used to bribe several high-ranking Communist party officials, who then allegedly received thousands of dollars of “pocket money” when they visited the United States.
There is no suggestion that Zurich was aware how the money was subsequently spent, and a spokesman for Zurich has stated that its shareholding in New China Life “is in compliance with the relevant laws in China and China Insurance Regulatory Commission regulations.”
