Dozens of China’s state regulators, bankers, finance bosses in corruption net as crackdown stepped up in new year

The Central Commission for Discipline Inspection, China’s top anti-corruption agency, said in a statement on its website on Thursday that Lou was under investigation for “serious violations of party discipline and the law” – a familiar euphemism for corruption. Lou was in charge of handling bad debts at the bank until he retired in 2017.

According to the Post’s tally, 17 of those netted in the past five months were senior managers of state-held banks or their regional branches. Among these, four were retired officials of China Development Bank: former vice-president Li Jiping, former Shandong and Jilin provincial branch bosses Yu Zeshui and Zhang Chi, and former Qinghai branch vice-president Wang Zhun.

As one of the country’s three policy lenders, CDB is tasked with financing large-scale government development projects. It has become embroiled in several corruption scandals in recent decades. In one of the most high-profile cases, former chairman Hu Huaibang was sentenced to life in prison in 2021 for taking 85.5 million yuan (US$11.8 million) in bribes.

In the latest crackdown, 11 senior managers of the state-owned Industrial and Commercial Bank of China, China Construction Bank, and Bank of China have been placed under investigation. Along with Agricultural Bank, these lenders make up the “Big Four” central to China’s banking sector.

State insurers are also under scrutiny. Liu Anlin, former president of China Life Insurance Group; Sun Jian, former deputy general manager of the Guangxi provincial branch of the People’s Insurance Company of China; and Du Jintao, former general manager of the Shenzhen branch of China Taiping Life Insurance are also under investigation.

Xie Maosong, a senior researcher at Tsinghua University’s National Institute of Strategic Studies, said those with the power to approve large sums of commercial loans were always prominent targets for bribery as “the returns on such bribes might be [up to] a hundred times more”.

“We can see from past CCDI cases that businesses, especially property developers, would bribe bankers for loans to finance their projects,” Xie said.

“When the projects go sour, the loans become bad debts to be absorbed by the banks.

“But the bank loans are actually the people’s hard-earned savings, so the losses because of financial corruption are actually like stealing from the public.”

Cases involving regulators have accounted for only about 10 per cent of CCDI investigations in the finance sector, but their impact can be far-reaching. Analysts said some of these regulators were well-known public figures and their downfall jolted the sector.

One example is the fall of Ren Chunsheng, who led the preparatory work to set up the Complaint Mediation Centre of the new National Financial Regulatory Administration (NFRA). A CCDI notice on May 7 said Ren had been detained for “serious violations of party discipline and the law”.

Ren, 55, became a leading figure in China’s insurance industry after serving for decades at the former China Banking and Insurance Regulatory Commission, replaced by the NFRA last May. He was appointed chairman of China Insurance Investment Co Ltd in 2019 and later chaired the Shanghai Insurance Exchange.

And just two weeks before Ren’s detention, the CCDI announced that Yao Qian, director of the technology supervision department at the China Securities Regulatory Commission (CSRC), had also been detained for a corruption investigation.

Yao’s fall was a bombshell for China’s digital and cryptocurrency world, because he was once hailed as the “crypto man” at the country’s central bank.

That nickname was due to his stint as the first director of the People’s Bank of China (PBOC) digital currency research institute, which studied the development of the digital yuan, although China bans cryptocurrency outside the state sector.

A Beijing-based official who knew Yao said his detention followed the trial of his former boss, ex-PBOC deputy governor Fan Yifei, who was accused of taking more than 386 million yuan in bribes.

The digital yuan was one of Fan’s portfolios at the PBOC, and Yao was his key aide on cryptocurrency technology and research in the state sector.

Fan, 60, is the most senior central bank official to undergo trial. He has admitted all charges and is now awaiting sentencing.

“Yao was taken away on April 24, exactly one week after the central government’s inspection group came to the CSRC for their annual disciplinary inspections,” the official in Beijing said.

President Xi last year ordered the CCDI to focus its efforts on the finance sector, warning about “prominent problems” such as “repeated financial disorders and corruption, and weak financial supervision and governance capacity”.

China must “comprehensively strengthen financial supervision”, he told a twice-a-decade financial work conference in October, which reasserted the need for greater control by the Communist Party to fend off systemic risks.

In January, Xi laid out a road map for China to become a “financial superpower” with a focus on the real economy, while highlighting more urgent tasks in its efforts to defuse rising financial risk, and calling on the CCDI to show “absolutely no mercy” in the “severe and complex” battle.

Deng Yuwen, a former deputy editor of the Study Times, the official newspaper of the cadre-training Central Party School, said Beijing would keep up the pressure because cases of financial corruption were often intertwined.

“On the surface, you might never know who is colluding with whom. But once you have cracked one case, you will probably find a few more, just like harvesting crops.”