China’s Minsheng Bank involved in RMB3 billion fraud

April 21, 2017

BEIJING - Wealthy individuals who invested their savings with China Minsheng Bank have found themselves embroiled in an alleged RMB3 billion (US$436 million) fraud — the latest scandal to expose the lack of internal risk controls at financial institutions that could threaten confidence in the banking system, according to a Caixin report.

Minsheng Bank confirmed in a stock-exchange filing that the head of its Hangtianqiao sub-branch in Beijing, Zhang Ying, had been placed under investigation by police for suspected violation of the law. It did not specify the allegations against Zhang, saying only that the bank is co-operating with police to find out what happened, secure clients’ money and take legal responsibility where appropriate.

Sources close to the bank and the investigators told Caixin that Zhang was their main person of interest in the sale of a wealth management product to high-net-worth customers that raised about RMB3 billion.

The money was used by the bank to cover up a fraud involving bills of exchange. As of Wednesday, the police were still trying to locate Xiao Ye, Vice President of the sub-branch, another suspect alleged to be involved in the scheme, according to the sources.  www.webershandwick.cn (ATI).