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Wed, Mar 16, 2005 - Page 12 News List

CCB's head fired amid graft probe

BANKING SCANDALS The dismissal is seen as a blow to efforts by China to spruce up several of its state-owned banks for stock market listings


The chairman of the China Construction Bank (CCB, 中國建設銀行) has been sacked and is being investigated for graft in the latest scandal to hit China's corruption-ridden major lenders, a report said yesterday.

Exact reasons for Zhang Enzhao's (張恩照) removal remain unclear but sources said he was implicated in a scheme to solicit huge kickbacks in return for approving bank loans on favorable terms, Hong Kong's South China Morning Post said.

The bank is one of China's top four state-owned commercial banks which are being restructured and groomed for eventual stock market listings, with CCB expected to debut in Shanghai and Hong Kong later this year.

The central government was set to announce Zhang's sacking later this week, the report said, citing sources close to the bank.

Wu Xiaoling (吳曉靈) and Su Ning (蘇寧), both deputy governors of the People's Bank of China (中國人民銀行), are strong candidates to replace Zhang, the report in the newspaper said.

Officials at CCB could not immediately be reached for comment. Other employees refused to say whether Zhang was still working.

An official from the China Banking Regulatory Commission also declined to comment.

Zhang, 59, ironically became CCB president in 2002, replacing Wang Xuebing (王雪冰), who was sacked and later jailed for corruption. Zhang became CCB chairman last year.

The dismissal of Zhang could deal a major blow to the bank's efforts to sell a strategic stake to international banking giants before its initial public offering aimed at raising up to US$5 billion, the Post said.

The CCB is also investigating the disappearance of at least US$8 million from a branch in Jilin Province, reports said last month.

CCB's troubles

* The bank did not state why Zhang Enzhao was dismissed, but sources say he is implicated in a kickback scheme

* Zhang became president of CCB in 2002, replacing Wang Xuebing, who was fired and later sent to jail for corruption

* Zhang's firing could deal a blow to the bank's efforts to sell a stake to international banking giants

* CCB is also investigating the disappearance of US $8 million from one of its branches

The scandals are likely to spark more debate over the rush to list state banks, which the government hopes will make the banking system more competitive ahead of liberalization of the sector in early 2007. However, some officials are concerned the rush to list could be counter-productive and risks damaging investor confidence.

The scandals underline the weak supervision plaguing China's banking system, which allowed 4,000 officials to flee with US$50 billion in cash as of this year, state media said on Friday.

The Bank of China, another listing candidate for this year with CCB, is also investigating the disappearance of around US$120 million from a branch in Harbin, Heilongjiang Province.

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