China's National Audit Office denied a report that Bank of China officials in Guangdong province embezzled 6 billion yuan (US$724.9 million) over 10 years.
The 21st Century Business Herald yesterday cited an unidentified official at the agency saying that two branches of China's biggest foreign exchange lender in the southern province had been audited and the money was found to have disappeared in the nation's biggest case of financial fraud in half a century.
``I can responsibly tell you that this report is untrue,'' said Zhao Ping, a spokesman for the agency. He said that the report in the eight-month-old weekly contained a number of inaccuracies.
The charges were the latest to surface after a six-month government probe that has uncovered money-laundering and inappropriate loans in New York, Hong Kong and other branches. The cases -- the consequence of the decades-old practice of lending according to government policies instead of profit -- may jeopardize the Bank of China's plans to sell as much as US$6 billion in shares in Hong Kong, analysts said.
"You would expect a lot of corruption in the banks -- this is nothing new," said Yiping Huang, an economist at Salomon Smith Barney in Hong Kong. "It's one of the problems that has been revealed" as China imposes tougher accounting rules.
The 21st Century reporter who wrote the story, who asked not to be identified, said an editing error story meant that the story identified its source as an audit official when it was really a Bank of China executive. The reporter said he stood by the figure for the losses.
Bank of China officials didn't answer calls seeking comment on the report. The central bank declined to comment.
"We haven't received any information regarding the issue," said Wei Gejun, a spokesman at the People's Bank of China.
China's central bank is to tighten supervision of the country's banking industry in the wake of a string of scandals which included an alleged 6 billion yuan (US$724 million) theft from the Bank of China, it was reported yesterday.
The People's Bank of China (PBOC) will tighten cooperation with the Ministry of Finance to monitor accounting at commercial banks more closely, the Financial News said.
The central bank also pledged to put in place an information disclosure mechanism for commercial banks and regulate the current operation of the banks more closely, in line with international standards.
The Bank of China -- the country's largest foreign-exchange lender and one of four major state-owned banks, with more than 15,000 branches in China -- was already fined a combined US$20 million by US and Chinese authorities earlier this month after a probe into 22 questionable loans worth 2.7 billion yuan made under former president Wang Xuebing between 1993 and 2000.
Bank of China customers appear to be undaunted by reports that their savings may have been stolen.
"People like Wang try to take advantage of the loopholes in China's financial and regulatory system," said Gao Haibo, who has US$10,000 of foreign currency deposits at the Bank of China's Yabao Road branch in Beijing's Russian Quarter. Still, "Bank of China is a state-owned bank, and I'm sure it won't close down because of one man's wrong-doings."
The Guangdong-based 21st Century said managers at branches in Jiangmen and Guangzhou stole about 6 billion yuan. Canadian authorities are conducting their own investigation into US$73 million embezzled from Jiangmen's Kaiping sub-branch, the Far Eastern Economic Review reported last week.
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