Beijing police have smashed a loan scam by an automobile trading company which cheated a local bank out of 80 million yuan (US$9.7 million).

To date, four suspects have been arrested.

The general manager of the Beijing-based Zhongzheng Chuangwei Automobile Trading Co Ltd, surnamed Chen, is accused of fabricating car loan applications using more than 400 bogus applicants between March 2003 and January 2004, alleges the Economic Crime Investigation Division of the Beijing Municipal Public Security Bureau.

Also implicated is the former director of the bank's automobile finance service centre, surnamed Li, who is accused of accepting huge bribes from Chen and assisting the car loan swindle.

After resigning his post at the bank, Li became vice-manager of the automobile trading company. His new career ended with his arrest.

The bank, which has not been named by police, granted credits of 180 million yuan (US$21.8 million) to a total of 557 car buyers between March and December of 2003.

But, inquiries revealed only 200 of the applicants were genuine. Loans of more than 80 million yuan (US$9.7 million) cannot be recovered, according to the police.

One of the biggest bogus deals involved Chen and the Beijing-based Caixiong Gongmao Co Ltd in April 2003, it is alleged.

With false loan application documents offered by the company, Chen obtained 20 million yuan (US$2.4 million) from the bank,18 million yuan (US$2 million) of which was transferred to the company, while the 2 million yuan balance went into his pocket.

Chen is alleged to have withdrawn a total of 10 million yuan (US$1.2 million) from the 80 million yuan defrauded.

Two senior employees of Caixiong Gongmao, surnamed Shi and Guo, have also been arrested.

Source: China Daily