China's anti-graft unit to widen checks

Zhang Yujun, then President of Shanghai Stock Exchange, speaks at a conference in Shanghai, on Nov 24, 2011.
Zhang Yujun, then President of Shanghai Stock Exchange, speaks at a conference in Shanghai, on Nov 24, 2011. PHOTO: REUTERS

Watchdog to target country's financial sector, including central bank and regulators

BEIJING • China's anti-corruption watchdog said it would expand its inspections to major financial institutions, including the central bank and regulatory authorities, which are already under pressure after a spectacular stock market meltdown.

After a series of probes into large state-owned enterprises - in particular, oil firms - the Central Commission for Discipline Inspection, the Communist Party monitor, now plans to target the financial sector.

The new round of inspections will cover the central People's Bank of China, the China Banking Regulatory Commission, the China Insurance Regulatory Commission and the watchdog China Securities Regulatory Commission (CSRC), according to a long list posted online on Friday night.

China Investment Corp, the world's largest sovereign fund, commercial banks ICBC and the Bank of China and the country's major insurance companies will also come under scrutiny.

The anti-corruption watchdog will also examine stock exchange operators in Shanghai and Shenzhen, and the parent company of major brokerage Citic Securities.

After soaring 150 per cent in one year, the two bourses went into a tailspin in June that extended into August, tumbling nearly 40 per cent despite massive intervention by the authorities at a cost of hundreds of billions of dollars.

The frantic and clumsy state intervention was criticised, with some experts questioning the apparent contradiction with Beijing's intention to give a greater role to the market and private sector.

And the failure of the government's efforts to stabilise the stock markets reinforced growing doubts about the effectiveness of its economic policy while Chinese growth is experiencing a severe slowdown.

The authorities also reacted to the stock market crash by launching high-profile police investigations into supposedly illegal transactions to reassure public opinion.

The authorities in August detained a CSRC official and four senior executives from Citic Securities for "stock market violations".

Last month, Citic Securities said police were investigating top officials from the brokerage, including its general manager Cheng Boming, for insider trading and leaking inside information.

The party also said it had placed Mr Zhang Yujun, an assistant chairman of the top securities regulator, under investigation for "serious violations of discipline", a euphemism for corruption.

President Xi Jinping has pursued a highly publicised anti-graft drive since taking office, with thousands of officials falling from power.

But some critics liken the campaign to a political purge and say the Communist Party has failed to introduce systemic reforms to prevent graft, such as public disclosure of assets.

In an article published on Friday by the party's official People's Daily, Mr Wang Qishan, head of the anti-corruption watchdog, urged party members to fall back on China's traditional virtues in curbing corruption.

The party must be under no illusions about how serious the problem is, he said.

AGENCE FRANCE-PRESSE, REUTERS

A version of this article appeared in the print edition of The Sunday Times on October 25, 2015, with the headline 'China's anti-graft unit to widen checks'. Print Edition | Subscribe