Bank of China said last night Hong Kong authorities are
investigating a suspect fraud case concerning the HK$1.77 billion
loan the bank's Hong Kong subsidiary issued to New Nongkai Global
Investment Ltd.
"Relevant law enforcement agencies in Hong Kong are conducting an
investigation into a suspected fraud case which involves one loan
customer of Bank of China (Hong Kong) Ltd," the bank's spokesman
Wang Zhaowen said in a statement. "BOC and BOC (Hong Kong) are
directing active and full-scaled support and assistance to the
investigation."
In
June 2002, BOC (Hong Kong) extended a HK$1.77 billion loan to New
Nongkai, owned by 42-year-old Shanghai tycoon Zhou Zhengyi who is
also known as Chau Ching-ngai in Hong Kong. Currently, the
outstanding value of the loan is HK$740 million, according to the
statement.
"The loan was granted in accordance with the internal risk
management procedures of BOC (Hong Kong) and it was secured with
certain risk preventive measures," Wang said.
To
safeguard BOC (Hong Kong)'s asset and the interest of its
shareholders, BOC (Hong Kong) has pressed New Nongkai for repayment
and has received the order from the High Court of Hong Kong to take
over New Nongkai, the statement said.
"Based on information available so far, the New Nongkai loan shall
not have major adverse impact on the financial position of BOC
(Hong Kong)," it said.
The overseas flagship of China's second-largest lender also said
that its board's Audit Committee will follow up the issue and
thoroughly examine its credit extension procedures, risk management
and internal control.
Wang said the head office in Beijing has noticed recent media
reports about Liu Jinbao, the former vice chairman and chief
executive of BOC (Hong Kong) who is allegedly involved with "a
particular loan customer" during his terms in Hong Kong and
mainland.
"The issue is being investigated," he said.
The statement came after Hong Kong's banking regulator said the
lender should clarify the reasons for Liu's recall to Beijing's
headquarters last month.
Liu is being investigated for loans made when he oversaw the Bank
of China's Shanghai Branch between 1994 to 1997 and when he ran the
Hong Kong business, according to earlier media reports.
Earlier this week, Shanghai spokeswoman Jiao Yang said that
investigations are underway into Shanghai Nongkai Development
Group, also owned by Zhou.
At
a meeting of the Standing Committee of the Chinese Communist Party
Shanghai Committee yesterday, Party Secretary Chen Liangyu said
Shanghai will cooperate with related departments in the "extensive
investigations" of Nongkai Group and Wantai Group, as required by
the central government.
"We should strive to keep Shanghai's healthy economic development
and maintain the social stability," he said
On
its Website, Wantai Group said it was established 1994 and
developed several real estate projects in Shanghai. The company's
subsidiary, Sun Man Tai Holding Company Ltd, is listed in Hong
Kong.
Trading of Sun Man Tai shares were suspended in Hong Kong yesterday
after the Standard and other Hong Kong newspapers reported its
owner Qian Yongwei was being questioned in Shanghai about more than
1.3 billion yuan in loans obtained from the Bank of China's
Shanghai Branch.
Sun Man Tai said its shares were halted pending "an announcement in
relation to price-sensitive information."
(Eastday.com June 7, 2003)