HONG KONG: Two managers of companies at the center of a decade- long, $482 million fraud at Bank of China were convicted Thursday of criminal conspiracy by a Hong Kong district court.
Hui Yat-sing, a former deputy general manager and director of Ever Joint Properties, and his wife, Wong Suet- mui, a former manager of Yau Hip Trading, face up to seven years in prison for handling tens of millions of dollars embezzled from Bank of China.
The mainland Chinese banking industry has been plagued by inadequate risk management and corruption, undermining confidence in the lenders. In November, Zhang Enzhao, a former chairman of China Construction Bank was sentenced to 15 years in prison for accepting 4.19 million yuan, or $539,000, in bribes. His predecessor, Wang Xuebing, was jailed for 12 years in 2003 for taking bribes.
The Hong Kong trial, which began in October, was the first proceeding in China held outside of the mainland related to the misappropriation of $482 million from a Bank of China branch in the city of Kaiping, about 110 kilometers, or 70 miles, from Hong Kong.
Hong Kong is a special administrative region of China, and has a separate legal system from that used in mainland China.
Hui and Wong, both 48, were charged with conspiring with three Bank of China managers and others by handling money stolen from the bank between 1992 and 2001.
A Hong Kong prosecutor, Charlotte Draycott, said the funds were transferred to Ever Joint through complicit mainland companies that received loans from Bank of China, black market underground banks and unauthorized direct lending.
In convicting the couple, Judge Stephen Geiser rejected the defendants' defense that they thought they were handling legitimate money for a "window company" set up by Bank of China's Kaiping branch to conduct business overseas.
Bank of China, the second-largest Chinese bank, has accused the three branch managers in Kaiping of using Chinese companies to illegally siphon tens of millions of dollars to Ever Joint, which was registered in Hong Kong.
Two of the managers, Xu Chaofan, 41, and Xu Guojun, 48, fled to the United States in 2001. The managers, who are not related, are in jail in Las Vegas awaiting trial, scheduled to start this year. They face a 15-count U.S. federal indictment accusing them of racketeering, money laundering and visa fraud related to the theft.
Yu Zhendong, the third Kaiping manager, was arrested in Los Angeles in December 2002 and pleaded guilty to racketeering before being returned to China for a trial in April 2004. In a mainland court, Yu admitted to embezzling $82.47 million and stealing $167 million through bogus loans, according to press reports. He was sentenced to 12 years in March, Xinhua press agency reported.
Chinese banks uncovered 776 cases of fraud between January and October last year, with a quarter of the cases involving at least 1 million yuan, according to the China Banking Regulatory Commission. In one case, a manager at a Bank of China branch in central China stole 2.6 million yuan from a vault in November, The Shanghai Morning Post reported Dec. 5, citing local police.
http://www.iht.com/articles/2007/01/18/bloomberg/sxfraud.php
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