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Bank officials flee after US$120m go missing
(China Daily/Agencies)
Updated: 2005-01-24 23:52
The Bank of China, the country's largest foreign exchange bank, confirmed
yesterday that one of its sub-branches in Northeast China's Heilongjiang
Province was involved in financial fraud.
The scandal emerged on January 15 when Northeast Expressway, a
Shanghai-listed A share company, announced that 290 million yuan (US$34.9
million) of shareholders' funds deposited with the branch was missing.
Gao Shan, director of a division of the branch, reportedly vanished
following the disappearance of the money.
Deposits by other companies, amounting to as much as 700 million yuan
(US$84.3 million), also vanished.
Another official of the branch was also missing and the two are believed to
have fled to the United States or Canada, according to the South China Morning
Post.
Newspapers in Hunan and Shanxi reported that Northeast Expressway chairman
Zhang Xiaoguang had been arrested for misappropriating funds, the Hong
Kong-based paper said.
A Bank of China official said yesterday government departments are
investigating the case.
"It involves financial fraud," the official said, without providing further
information.
Economists said the scandal was bad news for Bank of China, which plans to go
public this year, and would have a negative impact on the bank's reputation.
Bank of China was selected by the central government as a pilot project to
become a joint stock bank.
After being recapitalized by a State injection of US$22.5 billion, the bank
reorganized itself into a joint stock company called Bank of China Limited in
August last year.
By the end of last October, the bank's bad assets ratio stood at 4.55 per
cent, a drop of 11.73 percentage points from the beginning of the year.
The bank's capital adequacy ratio, a measure of how much capital it has
relative to assets, stood at 8.56 per cent at the end of October.
The bank also has a plan to usher in foreign company investors as its equity
owners, in an aim to increase its capital strength, optimize the capital
structure and diversify the ownership.
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