China targets financial sector in corruption probe

OCT 24, 20152:29 PM

[BEIJING] China's anti-corruption watchdog said it would expand its inspections to major financial institutions including the central bank and regulatory authorities, which are already under pressure after a spectacular stock market meltdown.

After a series of probes into large state-owned enterprises - in particular oil firms - the Central Commission for Discipline Inspection, the Communist Party monitor, now plans to target the financial sector.

The new round of inspections will cover the central People's Bank of China, the China Banking Regulatory Commission, China Insurance Regulatory Commission and the watchdog China Securities Regulatory Commission (CSRC), according to a long list posted online Friday (Oct 23) night.

China Investment Corp (CIC), the world's largest sovereign fund, commercial banks ICBC and the Bank of China and the country's major insurance companies will also come under scrutiny.

The anti-corruption watchdog will also examine stock exchange operators in Shanghai and Shenzhen, and the parent company of major brokerage Citic Securities.

After soaring 150 per cent in one year, the two bourses went into a tailspin in June that extended into August, tumbling nearly 40 per cent despite massive intervention by the authorities at a cost of hundreds of billions of dollars.

The frantic and clumsy state intervention was criticised, with a number of experts questioning the apparent contradiction with Beijing's intention to give a greater role to the market and private sector.

And the failure of government efforts to stabilise the stock markets reinforced growing doubts about the effectiveness of its economic policy while Chinese growth is experiencing a severe slowdown.

The authorities also reacted to the stock market crash by launching high-profile police investigations into supposedly illegal transactions to reassure public opinion.

Authorities in August detained a CSRC official and four senior executives from Citic Securities for "stock market violations".

In September Citic Securities said police were investigating top officials from the brokerage, including its general manager Cheng Boming, for insider trading and leaking inside information.

The party also said it had placed Zhang Yujun, an assistant chairman of the top securities regulator, under investigation for "serious violations of discipline", a euphemism for corruption.

President Xi Jinping has pursued a highly publicised anti-graft drive since taking office, with thousands of officials falling from power.

But some critics liken the campaign to a political purge and say the Communist Party has failed to introduce systemic reforms to prevent graft, such as public disclosure of assets.

AFP