Former RBS China chief financial officer questioned by police
A former chief financial officer with the Royal Bank of Scotland's China operations was recently questioned by police over suspected economic crimes.
According to three sources with knowledge of the matter, Edgar Zhi, formerly also of ABN Amro China, was investigated by police for alleged illegal actions, and it is unknown yet whether he had violated any Chinese laws.
RBS said yesterday that Zhi had been dismissed and was no longer with the bank. "It is a police matter and we are unable to comment further," the bank said in a statement to the South China Morning Post.
A source said it was the British government that reported irregularities by Zhi to the authorities.
"The case is a wake-up call to foreign banks in China because they still lack sufficient knowledge about the local market," said one local official involved in supervising banks. "They should know that there are certain grey areas here and some of the mainland employees are bold enough to enter."
Zhi was suspected of misappropriating clients' money, according to one of the sources. The Chinese national, born in the early 1970s, was a chief financial officer with a Singapore technology firm between 1997 and 2002. He was chief financial officer of ABN Amro from 2003 before assuming the same post at RBS after the British bank's acquisition of its Dutch rival in 2007.
On the mainland, a lack of efficient oversight has made it easier for economic crimes to be committed in the banking sector. Dozens of bankers across the country have been found to have misused clients' deposits or have embezzled funds for different purposes all the way from equity trading to gambling.
In May this year, the Communist Party's anti-graft watchdog detained Yang Kun, an executive vice-president of the Agricultural Bank of China, as part of an investigation into illegal gambling operations and corruption.
Yang's detention was followed by the detention of Tao Liming, president of Postal Savings Bank of China, who was taken into custody on suspicion of illegal fundraising activities two weeks later.
Analysts said foreign banks, believed to have a better corporate governance than Chinese peers, will have to step up oversight of their mainland operations.