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SCMP Reporter

Mainland police have detained Zhou Lin, former president, chairman and party boss of the Shenzhen Development Bank (SDB), on suspicion of illegally extending loans.

The bank, the first mainland lender to sell a controlling interest to a foreign investor, was told on Tuesday that Mr Zhou had been detained with three  former officials who worked at the Shenzhen head office, the bank said yesterday. Police did not specify the loans that are the subject of the investigation, a bank spokeswoman said.

Mr Zhou, 54, was no longer playing a management role at the bank after being relieved of the chairmanship in December 2004.

As bank president, he was accused of trying to sabotage American firm Newbridge Capital's earlier effort to take a stake of up to 20 per cent in SDB and, as chairman, saw the revival of talks ending in Newbridge's agreement to buy a 17.89 per cent interest for 1.23 billion yuan.

Mr Zhou acted as party secretary of the bank until his departure in January, when the Shanghai-based Oriental Morning Post said he had been arrested in Beijing last year in connection with 1.5 billion yuan worth of non-performing loans.

Media reports said these loans  had been uncovered by the incoming management installed by Newbridge.

The Oriental Morning Post report alleged that Mr Zhou had been involved in granting the loans.

After its failed  first attempt to buy a near-20-per-cent stake in the bank, Newbridge filed a suit with a Texas court in May 2003 alleging Taiwan's Chinatrust Commercial Bank had conspired with Mr Zhou to sabotage its purchase of the stake.

SDB said in a statement the three other former bank officials had left the bank  last year so their detention would have no impact on SDB's  operations.

'We are actively co-operating with the police investigation,' it added.

Mr Zhou was named president of SDB in July 1997, a position he held until September 2003 when he was appointed chairman.

SDB  struck a deal last year to sell 7 per cent of the bank to General Electric's consumer finance arm.



Shenzhen Development Bank's ex-chairman held over loans