Sun, Aug 06, 2017 - Page 7 News List

How China’s biggest bank became ensnared in a sprawling money laundering probe

ICBC, at the direction of the Chinese Communist Party, is a flagship in China’s quest to become a global banking giant. However, an investigation into money laundering has led to diplomatic complications

By Angus Berwick and David Lague  /  Reuters, MADRID

Law enforcement officials in Spain are preparing to expand their probe, reporters have been told.

Prosecutors plan to ask the judge in charge of the case to summon ICBC’s Luxembourg-based European administrative board for questioning for the first time, two Spanish officials involved in the investigation said.

The Luxembourg unit of ICBC holds the lender’s EU bank license and is responsible for supervising the Madrid branch.

ICBC spokesman in Europe Sun Feng said the case file was sealed by the court so the bank could not comment on it.

ICBC, he added, was a “law-abiding company” and had cooperated with Spanish authorities.

“ICBC Spain Branch has been insisting on operating within the law and regulations and has continuously strengthened the internal control of anti-money laundering,” Sun said in a written response to questions for this article. “ICBC Spain Branch has always been actively cooperating with the judicial authority to conduct the investigation.”

Repoters spoke to five of the arrested ICBC employees by telephone and sent questions to all seven and their lawyers. All but Wang, who commented very briefly, declined to discuss the case.

“Inside the bank, I am the lowest-level employee,” Wang said, who declined to discuss the wiretap transcript of her telephone conversation with Xu.

Wang referred all questions to ICBC.

Xu, who was arrested and released on bail in late 2012, fled to China. She could not be reached for comment.

POLICE SURVEILLANCE

The court filings and wiretap transcripts reviewed by reporters indicate that within eight months of ICBC opening for business in Madrid in January 2011, its staff there were soliciting money transfer business from people under police surveillance.

Money transfers to China soon accounted for an estimated 95 percent of the Madrid branch’s business, a Spanish judicial official said.

The wiretap transcripts document ICBC managers in at least 30 conversations with six leaders of Chinese networks in Spain, who police believe were seeking new avenues to launder money. These included conversations in which ICBC staff discussed how to avoid detection when moving money to China. On occasion, the staff warned of transfers that might attract unwanted attention.

After listening in on the Aug. 8, 2012, telephone conversation where Wang warned Xu, the police concluded from a series of wiretap conversations that Wang, “from her privileged position as an ICBC employee, was not only aware of the activities carried out” by suspected money launderers, but also was “actively collaborating” with them.

The police pointed in their report to the advice she gives Xu on “how the transfers must be made and how she must control the people working for her.”

The wiretap transcripts also document conversations between suspected Chinese money launderers in Spain and ICBC employees in China.

Officials involved in the investigation spoke to reporters on condition of anonymity because the probe is ongoing and Spain’s High Court has imposed secrecy orders on the proceedings.

From 2011 to 2013 ICBC’s Madrid branch transferred about 225 million euros to China, most of it for suspected criminal networks, the officials said.

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