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Monday, 29 September 2014

Officials implicate banks in $10bn Qingdao Port financing fraud

Officials from China’s State Administration of Foreign Exchange (SAFE) have implicated commodity financing banks in fraud allegations surrounding the alleged $10 billion in fake trades that went through the port, according to Chinese news source Xinhua.

"Some banks facilitated the abnormal increase in transit trade financing and fake trade deals by failing to fulfill the responsibility of authenticity checks and offering services of transit trade financing and receipt and payment," Wu Ruilin, deputy head of the Supervision and Inspection Department of SAFE said.

Ongoing investigations are still uncovering the extent of fraud at the port which involved several companies fabricating seals and warehouse receipts at the Qingdao Port in order to obtain multiple loans from banks.

In total 15 cases are under investigation for fake transit trade pending criminal liability prosecution. In response to the fraud investigations several global banks including HSBC and Standard Chartered, have launched their own legal actions to protect an estimated $900 million they have invested in connected businesses.

"Fake trades not only increase the pressure of hot money inflows, but also provide illegal channels for cross-border capital flows," Ruilin commented.


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