Chinese banker who embezzled US$108 million handed suspended death sentence
- Jiang Xiyun, the former chairman of Hengfeng Bank, also took US$8.6 million in bribes and illegally guaranteed 3.7 billion yuan in credit
- He destroyed accounts and records relating to US$94 million, according to the court ruling
A court in eastern China has handed down a suspended death sentence to a corrupt former chairman of a troubled regional lender, indicating Beijing’s determination to clamp down on banking risks.
According to a court ruling published on Thursday, Jiang embezzled 754 million yuan (US$108 million) of the bank’s shares; took 60 million yuan (US$8.6 million) in bribes; illegally guaranteed 3.7 billion yuan (US$528 million) in credit; and destroyed accounts and records relating to 660 million yuan (US$94 million).
Suspended death sentences are usually commuted to life in prison in return for good behaviour during the reprieve period. However, Jiang, 70, is unlikely to leave prison, with the court saying he would not be granted any further reduction in jail term or parole if the sentence was commuted.
The ruling shed fresh light on the lender’s operations under Jiang and his successor Cai Guohua as Hengfeng ended 2019 as one of the most spectacular bank failures in China.
The bank has not published financial statements since 2016 and last week received a state-led bailout of US$14 billion.
Cai has been the subject of a disciplinary investigation since late 2017 and is facing charges of taking bribes and misusing funds.
According to financial magazine Caixin, Cai allegedly attempted to misuse billions of the bank’s funds and financed his lavish personal lifestyle with bank money, spending roughly 400,000 yuan (US$57,000) per day.
The sentence imposed on Jiang is unusually harsh but not without precedent.
In December 2018, Yang Chenglin, the former chairman of the Bank of Inner Mongolia, was given the same sentence for taking more than 300 million yuan (US$43 million) in bribes.
Suspended death sentences were also issued to both Liu Jinbao, the former chief executive of Bank of China Hong Kong, in 2005 for embezzlement, and Wang Yi, the former deputy governor of China Development Bank, in 2010, also for embezzlement.
Hengfeng Bank was founded in 1987 as a pioneering home savings bank. It became a joint-stock bank with a business licence to operate nationwide in 2003. Singaporean lender United Overseas Bank bought 15 per cent of Hengfeng for US$115 million in 2008, and its stake is expected to be diluted to about 3 per cent after the bailout this week.
The bank has 306 sub-branches across the country and it is the third lender to be bailed out by the state since May.
The former chairman of Jinzhou Bank, Zhang Wei, died of cancer earlier this month. Caixin reported that Zhang tried to flee China for the United States in July but he was stopped by the police.
Troubled institutions must take the prime responsibility and their shareholders must be responsible for their actions, while large creditors must also have the ability to identify risks, according to Yi.