Bank of China reveals loan scam details
(Xinhua)
Updated: 2005-04-02 23:00

The Bank of China revealed Saturday it fired a Beijing loan officer for his role in a mortgage loan scam three years ago that cost the bank some 645 million yuan (US$78 million).

A man walks past a branch of the Bank of China in Beijing in this picture taken on March 9, 2005. [newsphoto]

Xu Weilian, deputy chief of retail operations at one of the Bank of China's Beijing branches, was dismissed and the case was reported to local police, Xinhua News Agency said, citing bank spokesman Wang Zhaowen.

Bank of China had granted loans to Beijing Huayuanda Real Estate Development Co. for an apartment project between December 2000 and June 2002, which was based on falsified contracts submitted by the company.

The loans were later diverted to another account and the project was later suspended.

The revelation comes amid a series of scandals over misconduct that has cost Chinese lenders hundreds of millions of yuan.

China's Banking Regulatory Commission, the banking watchdog, last month told its banks to step up measures to stop loan fraud and bank employee embezzlement following a series of major fraud cases.

In the biggest bank fraud case to date, the United States last April sent home a fugitive Chinese banker in Shenzhen, who was believed of stealing US$485 million, and having bought lots of properties in the United States with the stolen money.

The Bank of China (BOC) on Saturday accused a Beijing-based real estate firm of swindling approximately 645 million yuan (78 million US dollars) in mortgage loans.

Wang Zhaowen, a bank spokesman, said the real estate firm, known as Beijing Huayuanda Real Estate Development Co., has obtained the money for its "Senhao Apartment Project" during December 2000 and June 2002 from the BOC's Beijing Branch using falsified housing purchase contracts.

A man walks past a branch of the Bank of China in Beijing in this picture taken on March 9, 2005. [newsphoto]

The loans were then diverted by the company to unspecified place outside Beijing, and the project suspended, said the spokesman.

The bank said it reported the case to local police in September 2002 after it discovered what it called risky loans.

The bank has removed Xu Weilian, deputy chief of the branch's retailing sector, from his position and from the bank due to his role in offering the loans, said the spokesman.

Other employees held responsible for the problematic loans were also penalized by the bank.

The China Banking Regulatory Commission (CBRC), the country's watchdog of banking sector, issued a circular last month urging all banks around the country to exert greater efforts and adopt substantial measures to prevent and control risks.

The commission said some banks have encountered frequent and major fraudulent cases, causing huge losses, due to the lack of supervision, failure in punishing malfeasant activities, and weakness in risk and internal control. Leading management staff and those held responsible have to be dealt with and punished.

The public should be given access to reports about the occurrence of these cases, according to the circular, which offers 13 instructions concerning the management and risk control of banks.

The revelation comes amid a series of scandals over misconduct that has cost Chinese lenders hundreds of millions of yuan.

China's Banking Regulatory Commission, the banking watchdog, last month told its banks to step up measures to stop loan fraud and bank employee embezzlement following a series of major fraud cases.

In the biggest bank fraud case to date, the United States last April sent home a fugitive Chinese banker in Shenzhen, who was believed of stealing US$485 million, and having bought lots of properties in the United States with the stolen money.

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