Laws to include bank fraud, illegal disposal of non-performing assets as new crimes

The Chinese legislature is workingto include fraudulent activities for bank loans and illegal disposal of non-performing assets as new crimes in its criminal law, said Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), the country's banking watchdog in Beijing on Thursday.

This has become "very urgent" and "highly necessary," he said at a seminar on China's financial legal system held by the ChineseAcademy of Social Sciences.

The CBRC is working on a proposal concerning the rectification of relevant provisions in the criminal law, so as to curb the frequent occurence of scandalous banking crimes, he said.

Although China's criminal law lists some financial crimes, the lack of detailed judicial interpretation or clear standards for conviction concerning the new-type of banking crimes cannot meet the demand of new situation, he said.

The Legislative Affairs Office of the State Council has set up a working panel to amend relevant provisions of the criminal law in accordance with the new development of financial crimes, said Zhu Hong, an official with the People's Bank of China at the seminar.

Shocking bank crimes have been frequently unveiled in recent years, as China is striving to reform its banking system, whose rate of non-performing loans stood at 15.6 percent on average by the end of 2004.

Early this year, the head of the Bank of China's Hesongjie sub-branch in Harbin, capital of China's northernmost Heilongjiang province, embezzled a hefty amount of deposits from a local highway company and then disappeared.

During a loan fraud scandal, the former head of Foshan Branch of the Industrial and Commercial Bank of China (ICBC) took eight million yuan (about 967,000 US dollars) in bribes from a private businessmen who had taken huge bank loans and local governments' financial loans totaling dozens of billions of yuan by falsifying company performance records and conspiring with bank and government officials in south China's Guangdong Province.

The frequent occurrence of serious bank crimes is the result ofunreasonable old systems, a social credit environment, a traditional banking culture in China as well as the impotency of supervision mechanisms, said Liu recently.

China will enhance international judicial cooperation against banking crimes, setting up more effective mechanisms for judicial exchanges with Canada, the United States and one or two European countries, said Liu.

This will be conducive to the extradition of criminals and the confiscation of oveaseas state-owned property, and will prevent some developed countries from becoming asylums for Chinese criminals, he said.

Liu urged lawmakers to amend the regulations on punishing financial illegal activities that were promulgated in 1999, demanding detailed and strict provisions as well as more severe penalties.

Liu suggested the ongoing amendment of corporate bankruptcy lawbills should include specific provisions to safeguard the legal interest of banks as creditors.

The CRBC is researching the possibility of making a direct investigation on financial institutions' clients so as to find illegal activities concerning the banking sector, he said.

The improvement of the financial legal system aims to build a good credit culture, he said.

Source: Xinhua