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The China Press: Financial Corruption May Shatter the Nation’s Foundation

On February 11, 2015, the US China Press ( first published an article titled, “Financial Corruption May Shatter the Nation’s Foundation.” Then on February 13, 2015, China Review News re-published the article on its website. The anti-corruption campaign in the financial sector just started in January of 2015. As of now, three bank presidents and a number of high level bank executives have been put under investigation. Mao Xiaofeng, the president of Minsheng Bank, is under investigation. The CCP Central Commission for Discipline Inspection has set up a new division focusing on investigating financial corruption.

According to the article, the financial sector has become a place for big and small tigers (corrupt officials) and their children and relatives to come together. After the downfall of Zhou Yongkang, Ling Jihua, and some other high-ranking officials, at least 70 listed companies became embroiled in the anti-corruption movement. Companies involved in nonferrous metals, coal, oil, and other resources accounted for about a quarter of these listed companies. The businesses in which these companies are involved are closely connected with high ranking officials. For example, China Minsheng Bank reportedly has a "Wives Club." A number of the wives of high ranking officials regularly get paychecks although they do not work at all. Ampang Insurance, the largest shareholder of Minsheng Bank, has been growing rapidly over the past 10 years. It has assets of more than one trillion yuan (US160 billion) with licenses in insurance, banking, funds, and security firms. Overseas, Ampang has acquired the New York City landmark, the Waldorf Astoria Hotel; Belgium’s Insurance Company, FIDEA; and Delta Lloyd Bank of Belgium. “Ampang’s explosive growth is beyond the scope of conventional economics. Even Warren Buffett who started from investments in insurance has been lagging far behind. Ampang owes the people an explanation. What panacea does it have that can enable it move so easily through the trials in China with such a Midas touch?”

The article concluded, “Financial corruption, which is more covert than industrial corruption, is also more dangerous. It does not bring any material wealth to society, but it can result in huge losses of state assets. It can produce a financial elite class, fragment society’s distribution patterns, cause social instability, and even lead to a financial crisis. This is not alarmist. Such things have happened in Indonesia and other countries.”

Sources: US China Press, February 11, 2015 and China Review News, February 13, 2015