Banking Fraud In China

Banking fraud in China is a subject that has been in the news a great deal lately. In January of 2007, two company managers were convicted in a Hong Kong district court of bank fraud spanning a decade, in the amount of $482 million from the Bank of China. The individuals at the forefront of this case are a husband and wife who managed Ever Joint Properties and Yau Hip Trading respectively. For ages, the banking industry in China has been tarnished with corruption which has served to undermine the confidence of investors in the lending establishments. In addition, it also undermines the confidence of banking customers. There have also been several cases where individuals were jailed for accepting bribes.

The couple involved in this most recent fraud case were charged with conspiring with three managers from the Bank of China by embezzling and laundering money taken from the bank over a period of almost ten years. Prosecutor Charlotte Draycott stated the money was sent to the Ever Joint Properties company through mainland organizations who got loans from the Bank of China. Also, underground banks and direct lenders were also utilized in this fraud scheme. The judge who convicted the pair rejected their defense that they thought the money was legitimate.

They claimed that they thought the money was for a legitimate window company set up by the Kaiping branch of the bank for the purpose of conducting overseas business. The judge saw through this defense, and convicted not only the couple but three managers of siphoning millions of dollars to the property company. Two of the three managers fled to the United States in 2001 but are currently incarcerated in Las Vegas awaiting federal indictment on racketeering, visa fraud and money laundering charges.

The information currently known about banking fraud in China is a good thing because it alerts customers and bank officials to the potential dangers of banking in this country. Because of the high profile nature of this incident, bank officials are likely taking more advanced measures to prevent this type of bank fraud from happening again. Perhaps the conviction of the individuals in the Bank of China case will serve as a warning for other potential criminals considering bank fraud.

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