China launches new round of anti-corruption in financial sector

BEIJING (Reuters) – China’s ruling Community Party turned to the country’s vast financial sector this month, launching a new year-long campaign to uncover corruption and illegal dealings.

FILE PHOTO: The headquarters of the Communist Party of China’s Central Commission for Discipline Inspection is pictured in Beijing, China February 10, 2018. Picture taken February 10, 2018. REUTERS/Jason Lee

The country’s top anti-corruption watchdog has begun a roughly two-month inspection of more than 20 institutions, including the central bank, banking and insurance regulator, stock exchanges, commercial banks and asset management companies. assets, during its first coordinated inspection of the sector. since 2015.

Chinese President Xi Jinping is reviewing ties state banks and other financial institutions have developed with large private companies, The Wall Street Journal reported Monday, citing people with knowledge of the plan.

The inspections are a comprehensive “political review” of Party committees in financial institutions and regulators, according to statements released Tuesday by the Central Commission for Discipline Inspection (CCDI).

CCDI inspectors will look for any violations of political discipline – a Party euphemism for corruption.

The inspections follow a call in late September by China’s top anti-corruption official, Zhao Leji, for thorough inspections at Party organizations of 25 financial institutions and state regulators.

Since late 2020, Beijing has advocated “preventing the disorderly expansion of capital”, launching a crackdown on tech giants and private education companies.

The campaign focused on preventing the “wild growth” of certain platform companies in an effort to address their monopolistic and unfair competitive behavior.

“The latest central inspection…will certainly underscore Xi’s call to prevent disorderly capital expansion,” said Feng Chucheng, a partner at Plenum, an independent research firm.

“Party leaders likely realized they needed a more comprehensive top-down approach to managing systematic financial risks following the series of events since last year, including the IPO of Ant , Didi’s IPO and the latest developments in the real estate market,” Feng said.

When the sector was last inspected in 2015, at least a few hundred bankers and executives were censured and even fired. Offenses included holding prohibited in-house banquets and accepting vacations from clients.

In 2017, Xiang Junbo, the former chairman of China’s insurance regulator, was removed from his post after an investigation into one of the most important financial regulators in years. Xiang was sentenced to 11 years in prison in 2020.

In January this year, China executed Lai Xiaomin, the former head of China Huarong Asset Management Co, after he was found guilty of accepting 1.79 billion yuan in bribes.

On Monday, the CCDI said the former chairman and Party chief at Chang’an Bank, based in northwestern Shaanxi province, had been expelled from the Party and public office over corruption.

In recent months, Chinese regulators have also targeted sectors ranging from technology to education and real estate, targeting some of the country’s biggest companies like Alibaba Group and Tencent Holdings.

Reporting by Ryan Woo and Cheng Leng; Editing by Louise Heavens and Steve Orlofsky

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