Bank Of Communications 'Learns A Lesson' From Fraud

by Mary Swire, for LawAndTax-News.com, Hong Kong

16 June 2006

It has emerged that China's fifth-largest bank, Bank of Communications, has been defrauded by staff at one of its branches, to the tune of around 200 million yuan ($25 million).

Following reports that the head of the bank's Shenyang branch had been removed from his post due to possible involvement in the fraud, Bank of Communications last weekend issued the following statement:

"We have noted certain reports recently released by the press media on the case of our Shenyang branch. Recently, during the execution of a case inspection program and in the course of customer information management system upgrade, it was discovered in Shenyang branch a fraud on appropriating customers' funds."

"After initial examination, an amount of approximately RMB200million was involved. Our bank actively teamed up with the public security authorities on the inspection of this case and activated related emergency systems to carry out quick measures for asset protection. The risk exposure of this case is therefore effectively put under control."

"Our bank have [sic] learned a lesson from this case and is decisive in strengthening internal control, optimizing the workflow, further raising the technical standard of risk management and preventing operating risk. We will hold up the aim of establishing ourselves as one of the best international public shareholding bank, and will drive on to attain a sustained growth in return on assets and return on equity."

Leading international finance group, HSBC holds a 19.9% stake in Bank of Communications.

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