China suffers $1,4bn bank fraud: reports
August 6, 2009
Beijing - A Chinese businessman is on trial in China's biggest suspected bank fraud case involving as much as 1.43 billion dollars, the Financial Times reported Thursday.
Wang Sheng, former chairman of property developer Canton Property Investment Ltd, allegedly obtained about 4.8 billion yuan (700 million dollars) of illegal loans from state-controlled Bank of Communications, which is 18.6 percent owned by HSBC.
Prosecutors in the southern city of Guangzhou allege Wang was the main recipient of the loans, which were arranged with a senior executive of the bank and never made available to the company, the FT said.
Chinese financial magazine Caijing reported last week that a total of four people, including Wang, were involved in obtaining the fraudulent loans.
It said they included Liu Changming, 45, former president of the bank's Guangzhou headquarters, who fled China before the end of 2007. He was being transferred to Wuhan and never turned up for his new job.
Wang, who also used the name Keng Wong according to the FT, was arrested in August last year.
The FT said the loans were channelled through subsidiaries of Canton Properties without the knowledge of shareholders, who were told the firm had no unpaid bank debt.
Canton Properties suspended trading in its shares, which are listed on London's Alternative Investment Market, after Wang disappeared in August 2008 and most of the company's board resigned.
"We later discovered Mr Wang had been arrested but it wasn't until recently that we discovered the true scale of the alleged fraud," Anthony Knight, chief executive of Canton Properties, who was appointed in February to try to recover investments of foreign shareholders, told the FT.
Caijing said in a report Sunday that the case involved as much as 9.8 billion yuan (1.43 billion dollars). It reported earlier that about 4.6 billion yuan of the missing funds had not been recovered.
The FT said that in August last Canton Properties' assets, which include two shopping malls in Guangzhou, were valued at 963 million dollars.
In the same month the company announced it had no outstanding bank debt and Wang was arrested over the fraud.
Bank of Communications was not immediately available for comment. - Sapa-AFP
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