CASPER
THE FRIENDLY GHOST
U.S. officials believe China's insurance regulator passed on proprietary information about AIG to its Chinese rivals during the American firm's collapse in 2008, according to unpublished diplomatic cables.
The U.S. government bailout of American International Group Inc in 2008 sent shock waves around the world, and China seemed especially rattled.
The Chinese Insurance Regulatory Commission (CIRC) forced AIG's local operations to open their books on a daily basis after the company's September 2008 rescue, according to a series of U.S. diplomatic cables obtained by WikiLeaks and provided to Reuters by a third party. The regulator then shared the confidential information with local competitors, in part to convince at least one of them to buy the troubled assets.
The cables were based on diplomats' repeated conversations with unidentified AIG executives.
While the regulator's efforts went for naught -- AIG's various Asian operations were ultimately sold in part to MetLife and in part to the public in the IPO of AIA Group -- the cables shed new light on the way the Chinese approach large and troubled foreign companies.
"CIRC appears to be mixing its role as a regulator of China-based insurance companies with intentions to support domestic Chinese insurers," the U.S. consulate in Shanghai wrote in an October 22, 2008 cable.
"That CIRC would coordinate closely with domestic Chinese insurance firms is no surprise, but the situation here appears to take this a step farther, with CIRC actively eliciting information from AIG that would be helpful to AIG's Chinese competitors in acquiring parts of AIG's business."
The Chinese regulator, in a statement, said its actions were appropriate and suggestions to the contrary were "a serious departure from the facts or sheer fabrication."
"During the period when (China) dealt with the global financial crisis, CIRC maintained unhindered communication with insurance regulators of various countries, including the United States, and regulated AIA, AIU and other foreign insurance firms operating in China in accordance with laws and regulations. AIG and its China office never raised the various problems stated in your (news) agency's interview outline."
SUMMONED TO BEIJING
AIG executives told consular officials in Shanghai they were summoned to Beijing the day after the rescue to explain themselves, the speed of the request coming as a surprise.
The next day, AIG told consular officials Shanghai-based regulators threatened to immediately pull the company's licenses if it did not disclose -- and stop enforcement of -- any support arrangements with other AIG units.
The first indication of a more direct purpose came September 25, 2008, when AIG told consular officials the CIRC had had a meeting of domestic insurers to see if any wanted to buy the AIG operations, and at least one said yes. The cable did not disclose who that potential buyer was.
But by October 22 of that year, AIG said the CIRC apparently already had a favorite buyer -- China Life, the world's most valuable insurer.
It remains unclear how far the commission went to arrange or push China Life's candidacy as a buyer. The head of the commission's international department told Reuters in November 2008 he had not heard anything of China Life having any interest, after China Life sources said the company was interested in certain AIG assets in Asia.
The discussion of AIG's situation ended, at least in the available cable traffic, after that last note.
AIG's rescue ended up totaling $182 billion, and it sold off a number of assets, including various businesses in Asia. The U.S. Treasury owns a 92 percent stake in AIG, on which it stands to make a profit in the billions of dollars.
Both the Federal Reserve Bank of New York, which provided the original AIG credit facility, and the U.S. Treasury Department declined to comment. A spokesman for AIG declined to comment. The State Department also declined to comment.
The U.S. government bailout of American International Group Inc in 2008 sent shock waves around the world, and China seemed especially rattled.
The Chinese Insurance Regulatory Commission (CIRC) forced AIG's local operations to open their books on a daily basis after the company's September 2008 rescue, according to a series of U.S. diplomatic cables obtained by WikiLeaks and provided to Reuters by a third party. The regulator then shared the confidential information with local competitors, in part to convince at least one of them to buy the troubled assets.
The cables were based on diplomats' repeated conversations with unidentified AIG executives.
While the regulator's efforts went for naught -- AIG's various Asian operations were ultimately sold in part to MetLife and in part to the public in the IPO of AIA Group -- the cables shed new light on the way the Chinese approach large and troubled foreign companies.
"CIRC appears to be mixing its role as a regulator of China-based insurance companies with intentions to support domestic Chinese insurers," the U.S. consulate in Shanghai wrote in an October 22, 2008 cable.
"That CIRC would coordinate closely with domestic Chinese insurance firms is no surprise, but the situation here appears to take this a step farther, with CIRC actively eliciting information from AIG that would be helpful to AIG's Chinese competitors in acquiring parts of AIG's business."
The Chinese regulator, in a statement, said its actions were appropriate and suggestions to the contrary were "a serious departure from the facts or sheer fabrication."
"During the period when (China) dealt with the global financial crisis, CIRC maintained unhindered communication with insurance regulators of various countries, including the United States, and regulated AIA, AIU and other foreign insurance firms operating in China in accordance with laws and regulations. AIG and its China office never raised the various problems stated in your (news) agency's interview outline."
SUMMONED TO BEIJING
AIG executives told consular officials in Shanghai they were summoned to Beijing the day after the rescue to explain themselves, the speed of the request coming as a surprise.
The next day, AIG told consular officials Shanghai-based regulators threatened to immediately pull the company's licenses if it did not disclose -- and stop enforcement of -- any support arrangements with other AIG units.
The first indication of a more direct purpose came September 25, 2008, when AIG told consular officials the CIRC had had a meeting of domestic insurers to see if any wanted to buy the AIG operations, and at least one said yes. The cable did not disclose who that potential buyer was.
But by October 22 of that year, AIG said the CIRC apparently already had a favorite buyer -- China Life, the world's most valuable insurer.
It remains unclear how far the commission went to arrange or push China Life's candidacy as a buyer. The head of the commission's international department told Reuters in November 2008 he had not heard anything of China Life having any interest, after China Life sources said the company was interested in certain AIG assets in Asia.
The discussion of AIG's situation ended, at least in the available cable traffic, after that last note.
AIG's rescue ended up totaling $182 billion, and it sold off a number of assets, including various businesses in Asia. The U.S. Treasury owns a 92 percent stake in AIG, on which it stands to make a profit in the billions of dollars.
Both the Federal Reserve Bank of New York, which provided the original AIG credit facility, and the U.S. Treasury Department declined to comment. A spokesman for AIG declined to comment. The State Department also declined to comment.