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Chinese anti-corruption officials have turn their sword to the
financial industry and taskforce from related central government
departments will be stationed in big state-owned commercial banks
on an auditing mission this year.
"Central government leaders also issued concrete directives to
persons in charge of financial institutions to cooperate with the
taskforce," disclosed an official with the Communist Party of
China's Central Commission for Discipline Inspection, attending the
on-going annual session of the national legislature, on condition
of anonymity.
Banking industry insiders acknowledged that corruption in the
financial industry may be more destructive to the country's
financial security than other problems.
Song Xingguo, head of the central bank's Shenyang Branch, listed
non-performing loans (NPL), or bad loans, as the main source of
corruption in the financial industry.
Statistics show that the outstanding NPL of major Chinese banks
remained at 2.44 trillion yuan (US$289.96 billion) at the end of
last year, with an NPL ratio of 17.8 percent, though the sum had
been reduced. The big four solely state-owned commercial banks
accounted for 1.91 trillion yuan (US$230.76 billion),with an NPL of
20.36 percent.
Song and many other legislators at the annual session who showed
great concern on the issue expressed satisfaction with what the
government has done to fight financial corruption.
Last month, Liu Jinbao, vice president of the Bank of China, one
of the Big Four, was removed from his post for being involved in a
case of economic crime, becoming the highest ranking banking
official thrust down by the anti-corruption sword following Wang
Xuebing, former governor of the Construction Bank of China. Wang
was sentenced to 12 years imprisonment last year on a charge of
accepting bribes worth 1.15 million yuan (US$139,000) in
1993-2001.
The punishment of the senior banking officials shows "the
government is stern and serious with corruption involving banks,"
said Gai Ruyin, a national legislator and mayor of Daqing City in
northeastern Heilongjiang Province.
The lawmakers at the session agreed that the establishment of
the China Banking Regulatory Commission last year meant a good
beginning of the government move against corruption in the banking
sector.
Early this year, the government decided to inject US$45 billion
into two of the Big Four, Bank of China and Construction Bank of
China, to support their restructuring into joint-stock commercial
banks. One of the objectives of the reform is to establish a sound
corporate governance structure and strict internal control
system.
Similar reform is also going on in other Chinese banks.
According to Xie Ping, director of the central bank's Research
Bureau, the root cause of financial corruption lies in the monopoly
of scarce resources. He urged efforts to promote market-oriented
banking reform, saying it is a fundamental means to fight
corruption in the financial industry.
(Xinhua News Agency March 12, 2004)
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