Bank of China cracks down on fraud
(China Daily)
Updated: 2005-06-09 08:45

Bank of China, the country's largest foreign exchange lender, said yesterday it plans to take nine measures including the exchange of work posts among staff to enhance the management of its low-level organizations in an effort to avoid further fraud scandals.

Spokesman Wang Zhaowen said major leaders of the bank's local branches will have to exchange posts every three years.

"We will take disciplinary measures against those who refuse to exchange posts," he said.

Managers will take five to 10 days holiday every year, during which time specially appointed supervisors will check internal management.

Wang said human resources and financial accounting responsibilities at county-level branches will be passed up the management hierarchy.

The appointment of presidents at branches lower than the provincial level will be reported to headquarters, he said.

The bank will favour morality when promoting local leaders, he added.

"The nine measures are aimed at effectively preventing criminal cases from occurring and further improving the bank's internal control system," Wang said.

The bank announced on Tuesday that it has uncovered 16 new cases of fraud involving 30 million yuan (US$3.6 million) during a nation-wide examination starting in February.

It recovered 23.8 million yuan (US$2.9 million), or 79 per cent of the total, and put officials responsible under control.

The China Banking Regulatory Commission has urged domestic banks to boost their risk-management systems and root out fraud, following a series of such scandals.

Bank of China announced in April that a property developer in Beijing used fake documents to fraudulently obtain about 645 million yuan (US$77.7 million) of mortgage loans from the Beijing branch.

In January, the bank said one of its sub-branches in Northeast China's Heilongjiang Province had been involved in a fraud case.

Researcher Wang Zhao of the State Council Development Research Centre said the series of scandals will have a negative impact on the bank's reputation.

"It suggests domestic banks have an urgent need to improve their internal control system and corporate governance," he said.

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