Founder of Chinese company with billions in B.C. assets gets 18 years for fraud

SHANGHAI _ A court in Shanghai sentenced the founder of the Chinese insurance company that owns New York City’s Waldorf Hotel to 18 years in prison on Thursday after he pleaded guilty to fraudulently raising billions of dollars from investors, state media reported.

Shanghai’s No. 1 Intermediate People’s Court also ordered the confiscation of 10.5 billion yuan ($1.6 billion) in assets from Wu Xiaohui, the former chairman of Anbang Insurance Group, which had gained a reputation for ambitiously expanding into hotels, real estate and insurance from Canada to South Korea.

Wu, who founded privately owned Anbang in 2004, has been accused of misleading investors and diverting money for his own use. He was detained last year and regulators seized control of Anbang in February. He was shown on state TV in March admitting guilt.

Wu initially had denied his guilt at his one-day trial, according to an earlier court statement.

According to Xinhua, Wu concealed his ownership of shares in companies controlled by Anbang, filed false statements with financial authorities and lured investors by offering rates of return above that offered elsewhere. Much of the business relied on selling insurance products to raise investment capital.

It said he used more than 100 companies under his control to manage funds and authorities later recovered bank savings, real estate and other assets. Wu used his position to misappropriate 10 billion yuan ($1.5 billion) in Anbang’s deposits, according to Xinhua’s lengthy report.

Xinhua said the court determined the length of the sentence according to the facts of the case, the severity of the crime, and its “degree of social harm.” It said more than 50 people were present at the sentencing, including Wu’s relatives and journalists.

Anbang last month said it was receiving a $9.6 billion bailout from a government-run fund. That would mean the government fund owns 98 per cent of the company, wiping out most of the equity stake once held by Wu and other shareholders.

The company had engaged in a global asset-buying spree in recent years, raising questions about its stability. Anbang discussed possibly investing in a Manhattan skyscraper owned by the family of U.S. President Donald Trump’s son-in-law and adviser, Jared Kushner. Those talks ended last year with no deal.

The negotiations with Kushner Cos. about 666 Fifth Ave. prompted members of the U.S. Congress to raise ethics concerns.

The Anbang case is one of a string of scandals in what had been a stodgy Chinese insurance industry long-dominated by state-owned insurers. The industry’s former top regulator was charged in September with taking bribes and other insurers have been accused of reckless speculation in stocks and real estate.

The Communist Party has made reducing financial risk a priority this year after a surge in debt prompted rating agencies last year to cut Beijing’s credit rating for government borrowing.

Anbang is being run by a committee of officials from China’s insurance regulator, central bank and other agencies. They have said its obligations to policyholders and creditors are unaffected.

Over the years, Anbang grew to more than 30,000 employees with 35 million clients. It diversified into life insurance, banking, asset management, leasing and brokerage services.

Speculation is rife over possible sales of Anbang’s assets, which, in addition to the iconic Waldorf purchased for almost $2 billion include Dutch insurer Vivat NV, the San Francisco Westin St. Francis and hotels, real estate and insurance holdings in Canada, Belgium and South Korea.

Real estate group fears homegrown pot risks fires, property damage

OTTAWA _ The Canadian Real Estate Association says Ottawa needs to put the brakes on letting people grow pot at home until it can better regulate it to prevent property damage and higher risks of crime and fires.

It is the latest criticism of the government’s legislation legalizing marijuana that is inching its way through the Senate as the government tries to make pot legal to buy, grow and sell across the country this summer.

The bill would allow individuals to grow up to four pot plants at home as long as they are below a certain height, but association CEO Michael Bourque says there are too many risks from home grow-ops that haven’t been addressed yet.

Bourque is one of several parties discussing the pot bill at the Senate social affairs committee this week.

Later today, Foreign Affairs Minister Chrystia Freeland will appear at the Senate foreign affairs committee to talk about how the bill may affect international commitments, including United Nations drug treaties.

Three Senate committees today are also expected to release preliminary reports on their views of the bill, including possible impacts on Indigenous communities, the border and some of the Criminal Code and judicial elements in the bill.

B.C.’s tight rental market has landlords asking personal questions: report

Some landlords in British are asking prospective tenants for too much personal information including credit card details, three months worth of bank statements and inquiring whether applicants were born in Canada, says the Office of the Information and Privacy Commissioner.

Acting commissioner Drew McArthur said 1.5 million people live in rental housing, representing about 30 per cent of all households in B.C., but the vacancy rate is so low across much of the province that landlords are taking advantage of the power imbalance.

“Housing is big business in B.C.: In one estimate, residential tenancy generates a greater direct impact on GDP than the mining or forestry industries,” McArthur said in a report released March 22, 2018.

Nationally, the urban centres with the lowest vacancy rates are all in British Columbia, with the province’s overall vacancy rate at 1.3 per cent, he said, adding Vancouver’s rate is 0.9 per cent. The lowest rate is in Abbotsford-Mission and Kelowna at 0.2 per cent.

McArthur said his office is investigating whether a new service complies with the Personal Information Protection Act in its collection of information about tenants from sources including social media platforms, which landlords are not authorized to search.

“In addition, I understand that some of these organizations require prospective tenants to complete behavioural questionnaires to evaluate their character,” McArthur said.

The Human Rights Code also prevents landlords from asking for information about race, religion and family status, McArthur said.

“You also cannot inspect an applicant’s current residence or ask if an applicant may become pregnant in the next 12 months,” he said.

Landlords are authorized to collect a reasonable amount of information, such as references, recent pay stubs, a letter from an employer or permission to call an employer about income, as well as age for rental properties restricted to people over 55.

McArthur said his office receives calls daily from anonymous tenants worried about the over-collection of their personal information though many don’t file complaints because they fear being blacklisted.

In one case, a caller said a landlord asked for copies of their child’s report cards, he said.

“During this investigation, I heard from tenants seeking luxury accommodation as well as basic housing. I heard from young people and from retirees, in urban and rural areas.”

One caller reported a landlord insisted on seeing his T4 slips, even though he had already verified his income by providing a letter from his employer, and another person said a landlord demanded consent to a credit check after an offer to pay one year’s rent in advance.

“A landlord is only authorized to request consent for a credit check where a tenant is not able to provide satisfactory references, or employment and income verification,” the report says. “While it is reasonable to collect a prospective tenant’s credit history in these circumstances, it will not be necessary for most tenants, and a landlord cannot require every applicant to consent to a credit check.”

The report is based on a review of 13 tenancy applications, eight involving for-profit landlords and five that pertain to non-profit organizations. It found 10 of 13 landlords collect information, that, if used, would contravene the Human Rights Code as well as the Personal Information Protection Act.

Information requested included birth date, driver’s licence number, social insurance number, federal tax assessments, whether the applicant speaks English and the name of their bank and how long they’d been a customer there.

The report makes 13 recommendations, including that landlords must state clear, specific purposes for collecting personal information.

US real estate franchise expands Canadian footprint

Excerpted article was written by Steve Randall – Canadian Real estate Wealth

Boston, MA based commercial real estate franchisor SVN International Corp. has expanded its Canadian footprint with a new office in Alberta.

The new franchise office SVN 360 Commercial provides full-service commercial real estate brokerage services throughout the Edmonton and northern Alberta markets and is led by president Dennis Aubin.

The business operates under a model of ‘compensated cooperation’ which its website says guarantees that “equitable co-brokerage fees are paid on all properties, and not only to brokers within the same company, but to any and all outside brokers involved.”

“I think this new brokerage model will be a welcome addition to commercial markets in Edmonton, Alberta and across Canada,” Aubin commented.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage.

Sudden rise in interest rates could cause home prices to drop 30 per cent: CMHC

A sudden rise in interest rates could cause house prices to plummet on average 30 per cent nationally, according to stress tests performed by Canada’s federal housing agency released Thursday.

Canada Mortgage and Housing Corp. said it studied the impact of two interest rate hikes _ a one percentage point increase over one quarter this year, followed by a 1.4 percentage point rise during one quarter next year.

CMHC said its mortgage insurance business would incur $1.13 billion in losses in such an event but that it could withstand the hit. A spokesman for the agency stressed that the scenario is an “extreme case” and would be unprecedented.

Interest rates have started to go up this week as a sell-off in the U.S. bond market has driven bond yields higher, making it more expensive for banks to access capital.

Two of Canada’s biggest banks – TD Bank and Royal Bank – have hiked their fixed mortgage rates, anywhere from 0.05 percentage points to 0.4 percentage points.

There are concerns that as interest rates rise, some Canadian homeowners could encounter difficulty making their mortgage payments and face the risk of default.

“Households are so leveraged right now and house prices are at such incredibly high levels relative to household incomes,” said David Madani, senior Canada economist at Capital Economics.

“Even a moderate doubling in interest rates _ which sounds like a lot but we’re talking about maybe 200 basis points (two percentage points) _ could potentially pop the housing bubble.”

Interest rates have been trending lower for more than a decade, but that has not always been the case.

Fuelled by inflation, mortgage rates soared in the 1980s and posted five-year fixed rates topping more than 20 per cent in 1981.

According to data kept by the Bank of Canada, the posted five-year rate for a conventional mortgage at the big Canadian banks climbed from 13.25 per cent in January 1980 to 16.75 per cent in April 1980, an increase of 3.5 percentage points.

However, Canada started using an inflation target to guide monetary policy in 1991 and since then inflation has been mostly tamed and interest rates have fallen.

The stress test conducted by CMHC was one of several extreme scenarios it examined over a time period from 2017-2021. They included a U.S.-style housing correction, a high-magnitude earthquake that destroys critical infrastructure in a major Canadian city and a drop in oil prices where they fall to US$20 per barrel next year and remain between US$20-30 for another four years.

Another scenario that the agency tested involved a “severe and prolonged” economic depression, which CMHC said would see house prices drop 25 per cent and unemployment rise to 13.5 per cent. The insurer said it would incur $3.12 billion in losses in that case.

CMHC said its capital holdings were sufficient to withstand all scenarios it tested. None of the scenarios should be considered a prediction or forecast, the agency added.

“Stress testing involves searching out extreme scenarios that have a very remote chance of happening and planning for them,” Romy Bowers, CMHC’s chief risk officer, said in a statement.

“Rigorous stress testing is an essential part of our risk management program and allows CMHC to evaluate its capital levels against these scenarios.”

 

Canadian Real Estate Association says home sales hit record last month

The number of homes sold throughout the country last month hit a record for October, the Canadian Real Estate Association said Tuesday, November 15, 2016.

There were 42,473 residential properties sold last month through the association’s Multiple Listing Service, up two per cent year-over-year.

Sales were up from October 2015 levels in about 60 per cent of all Canadian markets, with gains in the Greater Toronto Area and surrounding communities, though that was offset by declines in B.C.’s Lower Mainland.

The actual national average price for a home sold in October was $481,994, up 5.9 per cent compared with a year ago. Excluding Greater Vancouver and Greater Toronto, the average price was $361,012.

The figures coincide with changes brought in by the federal government aimed at stabilizing hot housing markets.

New measures introduced last month require stress tests for all homebuyers in need of mortgage default insurance in order to ensure they can repay their loans if circumstances change, such as a job loss or an increase in interest rates. Previously, stress tests were not required for fixed-rate mortgages five years and longer.

“Early evidence suggests that the influence of tighter mortgage regulations on sales activity has been mixed,” said association chief economist Gregory Klump in a statement.

“The federal government will no doubt want to monitor the effect of new mortgage regulations on the many varied housing markets across Canada and on the economy, particularly given the recent rise in uncertainty about economic growth prospects following the U.S. presidential election.”

 

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