The government has declared new controls to curtail
irregularities in the banking sector which include an instruction
that branch chiefs should resign if major crimes occur on their
watch.
Banks have also been asked to set up accountability systems
which would result in bank executives and auditors taking
responsibility for problems.
And in the future managers of branches involved in frequent
irregularities and criminal cases will not be permitted to take
similar jobs at other branches. Those breaking the law will be
transferred to judicial departments swiftly.
These were some of the 11 measures issued by the China Banking
Regulatory Commission (CBRC) on Friday to fight corruption and
fraud in banks, cooperative credit units, those responsible for
trusts and asset management companies.
The move followed a release by the National Audit Office of
China a week ago which exposed 51 criminal cases in the
Agricultural Bank of China involving 8.68 billion yuan (US$1.09
billion) and 157 bank officials in an audit of the bank's 2004
liability accounts.
The bank was also discovered to have granted irregular loans
totaling 27.6 billion yuan (US$3.45 billion) in 2004.
Over the past few years a number of high-ranking officials in
other big State banks, including the newly-listed Bank of China and
China Construction Bank, have been arrested for corruption and
fraud.
The number of such cases remains high within the industry, a
CBRC spokesman admitted. Although the watchdog made some progress
in 2005 it required to take tougher action to consolidate results
and prevent similar cases in the future, he said.
CBRC will also increase cooperation with other departments
including the police and auditing office to improve efficiency. And
more attention will be paid to the big commercial banks.
China's major banks are preparing for increased competition by
listing on overseas or domestic markets while an increasing number
of smaller joint-stock banks are introducing foreign investors and
going public.
"The banking sector is a crucial part of the national economy
and it also reflects the major problems of the economy," said He
Ziyun, a banking professor with the University of International
Business and Economics.
Problems in banks could be stopped by efforts from other sectors
as well as more surveillance from the public, auditors and
intermediaries but combining discipline and stability during reform
remained a challenge, he warned.
(China Daily July 4, 2006)