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This Week’s Movers and Shakers

Yao Gang (left) and Li Zhiling
Yao Gang (left) and Li Zhiling

| World of finance

Former IPO gatekeeper behind bars: Veteran regulator Yao Gang (姚刚), a former vice chairman of China’s securities watchdog, has been sentenced to 18 years in prison and fined 11 million yuan ($1.59 million) for taking bribes and insider trading.

From 2006 to 2015, Yao took advantage of his positions at the China Securities Regulatory Commission (CSRC) to gain benefits from companies involved in mergers or share transfers and to help companies under the commission’s supervision avoid penalties, according to a court verdict. In return, he received bribes worth nearly 70 million yuan paid through his relatives. He was also involved in insider trading in 2007 when he headed the CSRC department that reviews applications for initial public offerings (IPOs).

Yao is the latest CSRC official from the regulator’s IPO department to be jailed for corruption. Last month, a Beijing court rejected an appeal by Li Zhiling (李志玲) against her conviction in 2017 for taking bribes worth more than 40 million yuan, the harshest punishment for graft ever handed to an official at the CSRC. She now faces life in prison.

China has been considering shifting its lengthy approval-based IPO system, which provides opportunities for rent-seeking by officials, to a registration-based system similar to that in the U.S. where the market plays a much larger role in the process.

Changing of the guard

1

Duan Jining (left), Fan Wenzhong (center) and Jiang Bo

More details emerged on Monday about the key officials who will run the merged banking-insurance super regulator, the China Banking and Insurance Regulatory Commission (CBIRC).

Duan Jining (段继宁) now leads the International Cooperation Department, which oversees foreign banks and insurance firms. The new department was created from the merger of the China Banking Regulatory Commission’s (CBRC) Foreign Bank Supervision Department, which Duan previously led, and two international departments at the CBRC and the China Insurance Regulatory Commission (CIRC).

Jiang Bo (姜波), former head of the CIRC’s international department, now heads the CBIRC’s Insurance Intermediaries Regulation Department.

Fan Wenzhong (范文仲), former head of the CBRC’s international department who gained a doctoral degree in economics from Yale University, will be chairman of a financial holding company to be set up by the Beijing municipal government.

 

| Companies

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Wang Sanyun (left), Ye Jianming (center) and Hu Huaibang

Former policy-bank chief implicated in corruption case: The graft trial of former Northwest China’s Gansu provincial party boss Wang Sanyun (王三运) has brought to light allegations of a corruption network linking Wang with disgraced tycoon Ye Jianming (叶简明), founder of energy and financial conglomerate CEFC China Energy Co. Ltd., and Hu Huaibang (胡怀邦), who retired as chairman of the China Development Bank (CDB) in September.

During his five-year tenure as chairman of the CDB, Hu is alleged to have helped an affiliate of CEFC China buy a stake in the Bank of Hainan, prosecutors allege. He also helped another CEFC China unit obtain a $4.8 billion credit line from the CDB.

Over the years, CEFC China has amassed assets in Europe, the Middle East, Central Asia and Africa. Sources have told Caixin that the CDB was an important credit backer of CEFC China. Ye was placed under investigation for alleged economic crimes in January.

Fugitive billionaire’s company faces big fine

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Guo Wengui (left) and Ma Jian

Five senior employees of Chinese fugitive billionaire Guo Wengui (郭文贵) were handed suspended jail sentences on Friday after they were found guilty of crimes including coercion in a business deal and misappropriation of company funds. Guo’s company, Beijing Zenith Holdings Co. Ltd., was fined 60 billion yuan.

According to the court verdict, Guo asked now-disgraced former vice state security minister Ma Jian (马建) to threaten China Minzu Securities Co. Ltd. shareholders to accept a takeover from Beijing Zenith. Guo then embezzled more than 2 billion yuan from Minzu, using the company as his “wallet.”

The case has brought to light details of how Guo leveraged government connections in his financial dealings before he fled China in 2014 as he was being investigated for graft. Guo, also known as Miles Kwok, is now living in the U.S.

Contact reporter Lin Jinbing (jinbinglin@caixin.com)

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