Corruption found across China’s financial industry
Wasteful spending, bribe taking and pocketing off-book gains are flagged up by investigators following two-month review
Wasting public money on extravagant meals and overseas travels, taking bribes for handing out loans, and illegally pocketing off-the-book gains were some of the ways corruption had spread in the financial industry, China’s top anti-graft agency said on Thursday following a two-month review of the sector.
Some senior financial regulators and state bankers could face investigation, it added.
The reports by the Communist Party’s Central Commission for Discipline Inspection, covering 21 regulators and institutions, came after a stock market rout this summer and ensuing investigations into several senior regulatory officials and financial company executives.
The inspection covered the People’s Bank of China, the three regulators on banking, securities and insurance, the sovereign wealth fund, policy banks, top state-owned commercial banks and financial conglomerates, the two stock exchanges, and the foreign exchange administration.
Although the reports did not mention the names of the targeted officials, it said evidence in some cases had been transferred to upper-level officials at the CCDI and the party’s Organisation Department.
Zhuang Deshui, deputy director of Peking University’s Clean Government Centre, told the South China Morning Post that this round of inspections would uncover several corrupt officials in the financial sector where graft had been rampant in the past years.
The heads of the patrol teams all said that the disciplinary violations were the result of a loosened grip by the party, and the sector needed to better adhere to the central authorities.
All the heads of the regulatory bodies and institutions including central bank governor Zhou Xiaochuan and China Securities Regulatory Commission chairman Xiao Gang echoed the comments, pledging to strengthen disciplinary efforts to enhance work efficiency.
“We will capitalise on the rectification work to push the central bank to be more effective in its work,” Zhou said. “We will better implement the financial policies of the leadership in tandem with the efforts to make amends for the previous insufficient anti-corruption work.”
China’s leadership is adamant about cleaning up the sector after a stock market rout in mid-June wiped out as much as US$5 trillion of capitalisation despite an injection of more than 1.5 trillion yuan (HK$1.78 trillion) in rescue funds. The inspectors also uncovered undisciplined behaviour at cash-rich financial institutions, according to the CCDI reports.
At the Industrial and Commercial Bank of China, the world’s largest lender by assets, some officials had taken advantage of “innovative businesses” to pocket illicit gains. Inadequate regulation covering overseas branches had created loopholes for corrupt officials to commit wrongdoings.
China Investment Corporation, the mainland’s sovereign wealth fund, was described by the inspectors as a hotbed for undisciplined acts, with officials illegally using the institution’s money to foot the bills for golf and overseas travels.
State-owned financial institutions, which have enjoyed a cosy market monopoly, had been a target in the leadership’s anti-corruption campaign for a long time, according to Zhuang.