Mon, Aug 07, 2017 - Page 7 News List

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

By Angus Berwick and David Lague  /  Reuters, MADRID

A little more than two months after her bugged conversation with Wang Jing, a senior officer at the Madrid branch of the state-controlled Industrial and Commercial Bank of China (ICBC), bank client Xu Kai was arrested in August 2012 as part of an investigation, code-named Operation Emperor, a sweeping crackdown on Chinese organized crime.

Xu’s husband, Wang Feng, was also arrested.

Police found 34,530 euros (US$40,656) in cash when they raided the couple’s home, according to a police report on the raid.

Most of the intercepted calls involving ICBC staff were with Xu Kai and Wang Feng.

The husband and wife led a group “dedicated to the massive transfer of money to China,” according to warrants for their arrests.

The couple used secret codes in conversations with bank staff, police said in the court filings.

Money was referred to as “merchandise” and a sum of 10,000 euros was called a “unit.”

Xu and Wang fled Spain after being released on bail in November 2012, investigators said.

International warrants have been issued for their arrest. They face allegations of money laundering, tax fraud, forgery and belonging to a criminal organization.

Reporters were unable to contact Xu and Wang, whom the Spanish authorities say are back in China.

A former lawyer for Wang said he had no contact details for him.

The former Madrid branch head and current general manager of ICBC’s European division, Liu Gang (劉剛), was arrested two days after last year’s raid on the bank when he flew to Madrid from Luxembourg to assist his subordinates, investigators told reporters.

In 2012, Liu had been named one of the 10 most influential Chinese business executives in Spain by the country’s leading business daily.

Liu, who was released on bail in April last year, did not respond to questions sent to him and his lawyers.

Contacted by telephone, Madrid branch manager Liu Wei (劉煒) said he was busy in a meeting and hung up.

The court filings show that ICBC’s management in Spain knew the police were conducting an investigation more than three years before last year’s raid.

As part of Operation Emperor, Spain’s High Court in November 2012 authorized police to investigate the bank in connection with evidence collected in the wiretaps.

Judge Fernando Andreu ordered ICBC to immediately freeze all financial assets linked to the people under investigation, cancel all pending transfers and provide information on these clients to investigators.

ICBC complied with parts of the order, the court filings show.

It promptly wound down the money transfer services it provided the groups, investigators and former ICBC employees said.

However, prosecutors said in the summary of allegations released in May last year that ICBC had failed to comply with court orders requesting information about clients under suspicion.

They also said the bank had deliberately obstructed the investigation by supplying misleading information about its clients, their invoices and the accounts under investigation.

After prosecutors aired the allegations, ICBC Europe’s chairman Chen Fei (陳飛) said in a statement to the media that there had been no trial or verdict in the case, so “no references should be made to the bank’s guilt.”

Well before ICBC came under suspicion, the smuggling groups were already allegedly using other financial institutions to launder undeclared cash.

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