China: big network after extensive banking scam

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ChinaBig crackdown after extensive banking scam

Chinese police have arrested more than 200 people in connection with one of the largest banking scandals in the country’s history.

Illustrative Image: A police officer outside the US Embassy in Beijing, China on August 4, 2022.

REUTERS

Chinese police have announced the arrest of more than 200 suspects linked to one of the largest banking scandals in the country’s history, which had given rise to demonstrations of rare magnitude. Four rural banks in Henan province (center) suspended all cash withdrawals in April, catching thousands of small savers off guard. This situation had given rise to sporadic demonstrations, one of the largest of which took place in July in Zhengzhou, about 600 kilometers south of Beijing. In the process, the authorities announced the arrest of people who, according to them, belong to a criminal organization. Accused of controlling several local banks since 2011, the group has made illegal transfers through bogus loans, authorities said at the time.

Criminal organization

On Monday, Xuchang local police reported 234 people formally arrested in connection with the scam. “Significant progress” has also been made in recovering misappropriated funds, he said in a statement. Since last month, the damaged depositors have gradually recovered their money. The authorities have pledged to pay them back gradually, starting with those with the lowest savings.

The banking sector in rural China is hit hard by the central government’s policy of containing the housing bubble and debt in the world’s second largest economy. Banks in turmoil in Henan are part of a larger pool of small banking institutions hit by liquidity and management problems. Gathered peacefully in July, the injured savers were violently dispersed by individuals in civilian clothes during an unusual gathering in China of several hundred people. The demonstrators, who demanded to recover their money, accused the authorities in particular of inaction, including collusion with these banks.

Authorities already blocked

In June, Henan authorities came under fire from critics after allegedly manipulating health passes to turn them red to prevent attendees from going to a demonstration. The health pass is mandatory in China to access the vast majority of buildings, shopping centers, public places but also some means of transport. A red pass effectively equates to a travel ban and quarantine.

(AFP)

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