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

ICBC divided the funds being transferred to China between multiple accounts to ensure they did not exceed the 50,000 euros limit above which it would have had to declare to authorities, the summary said.

The bank failed to report any suspicious transactions as required under Spanish law regarding 78 of its clients, it added.

Detention and bail rulings for some of these customers show that they were already under investigation for suspected involvement in a range of crimes, including money laundering, tax fraud, bribery, extortion, forgery and smuggling.

According to the confidential court filings, police allege members of these suspected criminal organizations used fake documents, such as falsified passports, to open accounts at ICBC’s Madrid branch.

ICBC employees are suspected of accepting falsified invoices to justify the origin of money transferred to China, police said in the filings.

If the suspects from the bank and the alleged smuggling networks go on trial, it is possible some might deny they participated in the bugged conversations. They might also dispute the conclusions authorities drew from the wiretaps.


The ICBC arrests ignited a behind-the-scenes diplomatic spat in the spring of last year, senior Spanish officials said.

China was particularly incensed by the high profile raid on the Madrid branch and reports in local media linking the arrests with the “Chinese mafia,” according to Javier Serra Guevara, who was Spain’s chief commercial attache in Beijing at the time of the raid.

“We tried to explain to the [Chinese] that Spain’s government does not control the media,” Serra Guevara said.

After the raid, the Chinese Ministry of Foreign Affairs announced it had asked Spain to protect the “rights and interests” of Chinese companies and citizens.

Chinese Ambassador to Spain Lu Fan (呂凡) was more pointed at an investment conference in March.

“More than a year has passed since the case arose,” Lu said in Madrid. “This has undermined the confidence of Chinese business people and investment here and also that of the Chinese government. A prompt solution would help this confidence to return and for the cooperation between both countries to return to normality.”

Former Spanish minister of foreign affairs Jose Manuel Garcia-Margallo denied there had been a diplomatic crisis with China over the case.

“There was no pressure and we would not have tolerated it,” he said.

“The media attention has moved on, end of story,” he added, abruptly ending the interview.

Spain has been home to a thriving Chinese community for decades. Established residents and an influx of new immigrants, many from Qingtian County in Zhejiang Province, found that the global financial crisis provided an ideal opportunity to expand. Their goods were cheap and Spanish businesses were floundering.

Chinese manufactured goods flooded Spain. Imports from China increased from 4.7 billion euros in 2000 to 18.9 billion in 2010, the Spanish Ministry of the Economy said.


One sign of this expansion was the emergence of a sprawling industrial park called Cobo Calleja on the southern outskirts of Madrid.

The hub became one of the biggest trading centers for Chinese goods in Europe. The dense complex of warehouses and wholesale outlets sells a vast array of products in bulk — from lipstick to industrial compressors, ballet shoes, party hats, saucepans and national flags.

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