The Bank of
China vowed yesterday to strengthen internal controls in an
effort to clamp down on fraud following a string of high-profile
scandals.
"We should try to prevent similar cases from reoccurring," said
spokesperson Wang Zhaowen, as criminal cases have a negative impact
on the bank's reputation.
He made the remarks after the announcement that Beijing
Huayuanda Real Estate Development Company appeared to have colluded
with staff at the bank's Beijing branch to obtain about 645 million
yuan (US$77.7 million) in fraudulent mortgage loans for its Senhao
Apartments.
In January, the bank also announced that one of its sub-branches
in northeastern Heilongjiang
Province had been involved in fraud. Gao Shan, an official from
that branch, vanished along with 290 million yuan (US$34.9
million).
Wang Zhao, a researcher from the State Council Development
Research Center, said the latest case was typical for domestic
banks.
"There is a big loophole," he said. "It suggests the banks'
internal control systems and corporate governance are far from
perfect."
Domestic banks urgently need to improve controls as they face
fierce competition from foreign rivals, he added.
According to Wang Zhaowen, the Bank of China will carry out a
thorough review of all its business operations to find and close
loopholes.
"The examination will focus on the implementation of all of the
bank's rules and regulations, including exchange of work posts
among bank staff," he said.
The bank has already established a special team of experts from
consulting firms and banks to check business procedures,
institutional structures and existing internal control mechanisms,
he said.
It will also promote the education of its staff, he said.
The bank, which was chosen by central government as a pilot
joint-stock firm, won a US$22.5 billion capital injection from the
State in December 2003.
(China Daily April 5, 2005)