The news that China’s disciplinary watchdog will send inspectors into the country’s financial regulators and its top state-owned financial institutions to look for signs of corruption, negligence and disloyalty could soon be keeping some Chinese bankers awake at nights.
In the coming weeks, disciplinary officials will be parachuted into China’s top 25 financial institutions to ask questions, review complaints and reports, knock on doors and open files and locked cupboards. This would be like sending hundreds of FBI agents and federal prosecutors onto Wall Street to look for dirty deals.
The inspection is seen as routine as Communist Party cadres in China’s state financial system are subject to the same scrutiny, but this inspection could also be special as the collusion of money and power comes under special attention to answer many unanswered questions.
Given the track record of China’s previous probes into various provinces and other systems, the inspections will not end in vain. In the past, more than 60 per cent of the clues or reasons to initiate disciplinary probes came from inspection groups.
In one probe in December 2014, two inspectors raided the office of Chang Xiaobing, the then chairman of China Unicom. According to state media, Chang was ordered to open a closed door and behind it was discovered a mini warehouse containing all the gifts he had received, including expensive cigarettes, liquor, tea and also hundreds of works of art. This marked the start of probe into the boss of China’s second largest mobile carrier.
China’s state-owned financial system is vulnerable to corruption as too much money is controlled, but not owned, by a few, with a hybrid of market and command providing ample room for questionable deals.
The former chairman of China Huarong Asset Management, Lai Xiaomin, was executed earlier this year after he was convicted of corruption in a case involving 1.8 billion yuan (US$278 million). Huarong is one of the 25 institutions to be checked during this round of inspections.
It is safe to say that the inspections will trigger storms within China’s financial industry
China Development Bank, whose former chairman Hu Huaibang was sentenced to life imprisonment earlier this year for accepting bribes totalling 85 million yuan (US$13 million), will also be checked.
The China Banking and Insurance Regulatory Commission is also on the list after the former vice-chairman of the regulator, Cai Esheng, was investigated this summer.
What the inspectors do and their progress will not be disclosed to the public, but it is safe to say that the inspections will trigger storms within China’s financial industry.Internet Explorer Channel Network