Hi Jay... What's your take on the following? Sounds like we're talking about a bunch of fortune cookies given the purchasing power of $1 Billion in China:
thetimes.co.uk
Beijing banker sacked after $1bn disappears
FROM LYNNE O'DONNELL IN BEIJING
WANG XUEBING was the type of Chinese executive that so many of the world’s governments and business executives like to do business with.
Debonaire in designer suits, well-travelled and well-read, fluent in English and a connoisseur of fine Cuban cigars and French wine, the banker was a regular on the corporate golfing circuit and counted many of his tee-off partners — among them heads of major international corporations — as his friends.
As a senior executive in China’s state-controlled banking system, Wang’s lifestyle aped that of the free-spending and boisterous international banking community.
His wife, Zong Lulu, presented herself as an authority on modern Chinese culture and cultivated Taiwanese starlets and film directors. She even tried her hand at producing a film.
Wang himself was a protégé of Zhu Rongji, the Prime Minister, and had once been head of China’s state-run international banking arm, the Bank of China, and was president of the biggest of the four big state-owned banks, the Construction Bank of China. He worked hard, he played hard and once even chartered a jet to London for a round of golf.
All this, however, on an official monthly salary of just 2,000 yuan (£170).
Now, after the disappearance of almost $1 billion (£706 million), Wang, 49, is being investigated in the biggest banking scandal to hit China since the Communist Party took power in 1949.
Since he was dismissed on January 12 Wang has disappeared. He is rumoured to be under house arrest and has made no public comment.
A spokesman for the Bank of China said: “Wang Xuebing has been removed from his post and replaced by Zhang Enzhao. He is under investigation for financial irregularities committed while he was Governor of the Bank of China.”
His departure was followed within days by an announcement by the US Office of the Comptroller of the Currency that a two-year investigation into the Bank of China’s New York office had uncovered extensive malpractice between 1991 and 1999.
Wang, an expert in foreign exchange and gold trading, ran the New York office from 1988 until 1993.
The office is accused of “unsafe and unsound banking practices” during the 1990s that included “facilitation of a fraudulent letter-of-credit scheme, the facilitation of a loan-fraud scheme, the unauthorised release of collateral and the concealment of such action, and other suspicious activity and potential fraud”.
American investigators claim that the Bank of China’s New York office was run by avaricious executives who used the bank as a personal slush fund, handing out huge loans to friends who squandered the cash. The loans were later written off as losses.
The US Government fined the bank $10 million.
Last month the Chinese Government said that it was investigating the embezzlement of six billion yuan from the Bank of China’s operations in Guangdong, China’s richest province, which borders Hong Kong. Bank officials are accused of siphoning off billions of yuan for themselves. Dozens of former bank executives have been detained for questioning; three had fled to Canada with $73 million.
Corruption scandals are nothing new to China, and the true extent of embezzlement and bad loans at the major banks will probably never be known.
Chinese auditors estimate the total missing from Bank of China coffers at more than $300 million. The National Audit Office uncovered 22 fraud cases involving 2.7 billion yuan and implicating 35 people. That was part of more than 160 billion yuan embezzled by Chinese officials last year.
Many of China’s burgeoning ranks of modern-day tycoons and entrepreneurs have become used to the trappings of serious wealth as billions of dollars in assets disappear from the state sector annually.
But the latest scandal highlights a growing cancer at the core of China’s banking system that endangers its survival.
Membership of the World Trade Organisation obliges China to conform to international standards and the Government now faces tough decisions about ending systemic corruption which threatens to cripple efforts to build a normal economy and join the international community.
With five years before foreign banks are permitted to operate in China, plans for cleaning up the sector — described by a Western diplomat as “the worst and most corrupt” — have taken on a new urgency.
An American executive said that the cause of the problem was small-scale salaries which encouraged large-scale fraud. He said: “The jobs come with perks, like a flat and a car, but you have to wonder how the hell they pay for those suits.”
The ripples of the scandal have begun to spread. It has jeopardised plans for a $5 billion listing for the bank and, because of the personal link between Wang and Zhu, has the potential for serious political fallout that could further damage Zhu’s standing within the ruling clique of the Communist Party.
It has led to a ferocious debate on the implementation of reforms to the financial industry, with one wing arguing that reforms should be shelved because the industry is not ready, against those who call for the overhaul to be speeded to prevent its demise in the face of competition. |
