Jail term marks finance-sector crackdown as weak spots raise threat of implosion

A former Bank of Communications deputy governor, Lu Jiashan, was sentenced to three years' jail by a Shanghai court on Wednesday for accepting bribes to help clients secure loans.

A day before, mainland securities bodies fined three companies for illegally subscribing to a mutual fund, criticised 13 brokerages for failing to prevent the malpractice, and suspended six listed companies temporarily following volatile price movements.

Two weeks ago, the heads of eight bank branches were punished for financial irregularities. On the same day, the Shenzhen branch of the State Administration of Exchange Control and police arrested 32 people for illegal foreign exchange activities.

Financial newspapers gave the incidents extensive play, reflecting Beijing's concern and determination to crack down on financial misdemeanours.

Although shielded from the financial hurricane savaging much of Asia by the non-convertibility of its currency, the mainland banking system shares many of the woes bugging its neighbours.

Beijing has concluded that a financial implosion - if it comes about - can only be triggered by systemic weaknesses and domestic scandals, and has embarked on a campaign to strengthen its regulatory functions and clean up the trouble-ridden banking sector and stock markets.

The People's Bank of China (PBOC) - the central bank - this week released rules detailing penalties for financial institution officials found guilty of engaging in irregular practices.