| Auditor finds US$1.23b in irregular loans |
SHANGHAI, July 20 -- THE National Audit Office today issued a report indicating that the country's three major lenders irregularly loaned a total of 9.36 billion yuan (US$1.23 billion) in 2005.
The Bank of China, Bank of Communications and China Merchants Bank had issued loans to unqualified property developers or offered individual mortgage loans at unauthorized interest rates, the auditor said.
Lenders can offer up to a 15 percent discount on individual mortgage loans. Any discount more than that is considered an irregularity.
Bank of China, one of China's four biggest lenders, had irregularities worth 5.51 billion yuan, while Bank of Communications and China Merchants Bank were each found to have inappropriately handled nearly two billion yuan of loans.
The auditor also passed 37 cases to police for investigation after tough audits, among which 21 referred to Bank of China and eight each to BoCOM and China Merchants.
It was reported that a person identified as Niu, the former head of a Bank of China branch in Beijing, allegedly offered a private company 60 million yuan illegally from 1995 to 1998. Niu is now under investigation.
The report also said the boss of a Shanghai pharmaceutical company, which borrowed 420 million yuan from BoCOM between June 2002 and April 2004, allegedly devoured 156 million yuan by moving the funds to overseas banks or relatives' accounts. The boss, identified as Wang, was also being investigated.
The head of the offshore department of Merchants Bank, who was identified as Li, allegedly approved "a massive amount of loans" which caused nearly seven billion yuan in bad debt as of June 2006, said the report.
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