Anti-corruption teams to be installed at China’s state banks and insurance companies, acting like ‘human surveillance cameras’

Anti-corruption teams will be stationed in China’s state-owned financial conglomerates by the ruling Communist Party in the latest bid to curb rampant graft in the sector.

Targets include China’s four biggest banks and insurers, such as People’s Insurance Group and China Life Insurance, according to Zhao Leji, chief of party watchdog the Central Commission for Discipline Inspection (CCDI).

Zhao described the move as “just like installing surveillance cameras” in the institutions, keeping the companies and their top management team under constant watch.

Speaking at a recent internal meeting, Zhao said the new discipline inspection and supervision teams were part of a stepped-up effort by the CCDI to curb corruption and malpractice in the financial sector’s mega state-owned enterprises (SOEs).

The central party watchdog had previously relied on the SOEs’ internal disciplinary systems, which were then checked by CCDI inspection teams. In 2015 these inspection teams checked each of the state-owned financial institutions but none were stationed permanently with them.

In recent years the inspection teams have taken down a few “tigers” – as corrupt senior officials are known – including Xiang Junbo, former chairman of the China Insurance Regulatory Commission, who pleaded guilty last year to taking 19.4 million yuan (US$3 million) in bribes.

In June 2016, Yao Zhongmin, previously head of the supervisory board of China Development Bank, was detained for investigation, and was later found guilty of taking bribes totalling 36 million yuan (US$5.3 million).

Wang Yincheng, president of the People’s Insurance Co (Group) of China, became the highest-ranking cadre in the insurance industry to be investigated for corruption when he was taken away for questioning in February 2017.

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Observers believe the introduction of permanently stationed supervisory teams within organisations would have “a significant and immediate effect” on Beijing’s anti-corruption effort.

Wang Jiangyu, associate professor from the National University of Singapore’s law faculty, said the move would have a profound effect “because the SOEs, especially those in the financial sector, have lots of resources but too little supervision”.

“There are very serious problems of insider control, sometimes the corruption can be unscrupulous,” he said.

Wang said the move indicated the party was serious about widening and deepening its anti-corruption efforts, especially in the financial sector.

Government departments have already been under scrutiny for some time. According to party documents issued in November 2015, the CCDI has teams stationed in all 139 central party and state agencies.

Moreover, with the establishment in March this year of the National Supervisory Commission, surveillance will not only cover party members, but also widen to staff who do not belong to the party.

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“By setting up stationed teams, Beijing can also achieve better control of these financial SOEs to move in the direction it wants, like directing funds to the real economy, etc” Wang said.

But one source who works for a financial SOE sounded a note of caution.

He said it would take some time for the teams to settle down and clarify the working arrangements with the SOE’s current disciplinary organisations, “otherwise, there might be confusion on who is going to do what”.