Former Bank Director Embezzled 400 Million Yuan

March 11, 2006 12:00 am Last Updated: March 11, 2006 12:00 am

A financial scandal occurred again recently in Heilongjiang branch of the Bank of China, According to the latest issue of Finance (Caijing) magazine, Hu Weidong, former director of Simalu sub-branch, Heilongjiang branch, Bank of China, colluded with a local private enterprise, and wrote 96 bank drafts with a total amount of 914.6 million yuan (US$113.6 million) to the enterprise in two years. To date, 432.5 million yuan ($53.7 millon) has not yet been repaid. All the suspects have been caught.

This is the second scandal in China's banking system since 2005. In the previous one, Gao Shan, director of Hesong Street sub-branch, Bank of China in Harbin City of Heilongjiang Province, embezzled more than one billion yuan ($124 million) of enterprise deposits.

On February 7, 2006, when the clerk at Gangcheng Branch of Bank of China in Laiwu City, Shangdong Province was in the process of cashing the five acceptances due, totaling 48.9 million yuan ($6.1 million), he asked the payer bank, Simalu sub-branch in Heilongjiang to pay the past-due debt. However Simalu sub-branch found no record that it ever issued such five acceptances. They had simply been embezzled.

According to the report “The Largest Bank Case of 2006,” these five acceptances were only part of the various accounts held by Hu Weidong. They also led to the exposure of a collaborated embezzlement between bank insiders and outsiders.

According to the investigation, since March 2003, Zhu Dequan, chairman and general manager of Jixian County's Fuqiang Food and Oil Company Limited, colluded with former director of Simalu sub-branch of Bank of China, Hu Weidong, and vice-director Wang Lin, along with bank clerks Shen Hongze, Yang Xiaoping, Zhao Weize and others, in embezzling 96 acceptances, with a total sum of 914.6 million yuan. Fifty six of the acceptances were paid in cash after discounts before maturity. The rest – 432.5 million yuan was left unpaid.

In addition to the five acceptances of the Gangcheng Branch, 34 acceptances that amounted to 325 million yuan ($40.4 million) were discounted in cash at the Construction Bank and the Agricultural Bank in Jining, Shangdong Province. A part of the money was used in swap transactions, which resulted in huge financial losses. It is not known whether the rest of the acceptances were also discounted or not.

After the prosecution, Hu Weidong and the vice director of the Simalu sub-branch of Bank of China, Wang Lin, and five bank clerks including Shen Hongze, Yang Xiaoping, Zhao Weize, were all arrested. On February 25, Zhu Dequan, general manager of Jixian County's Fuqiang Food and Oil Company Limited, was also caught in Changchun City, Jilin Province.