Caixin
May 12, 2021 08:10 AM
FINANCE

Third Former Chairman of Jilin Trust Convicted of Bribery

With registered capital of 1.6 billion yuan, the company is 97% owned by the Jilin provincial government’s financial department and is the only trust firm in the northeastern province.
With registered capital of 1.6 billion yuan, the company is 97% owned by the Jilin provincial government’s financial department and is the only trust firm in the northeastern province.

Another chairman of troubled Jilin Province Trust Co. Ltd. was found guilty of corruption, extending the state-owned company’s streak of scandals involving every chairman since 2001.

Gao Fubo, chairman of the Jilin-based trust company between 2007 and 2015, was convicted of corruption, bribery and embezzlement, a local court said Tuesday. The court handed Gao a 20-year jail term, a fine of 5.1 million yuan ($794,540) and confiscation of 500,000 yuan of personal assets.

Gao is the third chairman of Jilin Trust to be convicted on corruption charges, and a fourth is awaiting trial. Gao’s predecessor, Zhang Xinbo — the company’s chairman between 2001 and 2007 —was sentenced to death with a two-year reprieve for corruption in 2009.

The lengthy series of corruption scandals underscores governance issues at Jilin Trust, which completed a corporate restructuring in 2001, according to financial industry insiders. With registered capital of 1.6 billion yuan, the company is 97% owned by the Jilin provincial government’s financial department and is the only trust firm in the northeastern province.

“This is not individual issues but problems stemming from the system,” said a financial industry source in Jilin. The province’s long tradition of rotating officials between local government departments and financial institutions undermines the professionalism of financial institutions and offers opportunities for corruption, the source said.

The turmoil in Jilin Trust also sheds light on internal governance flaws in China’s trust industry, which has become a focal point of the country’s financial risk crackdown in recent years. In 2019, regulators punished nearly one-third of China’s 68 trust companies for violations including illicit off-balance-sheet lending and illegal real estate investments, levying at least 22 million yuan in fines, according to Caixin calculations based on public records.

Gao arrived at Jilin Trust in 2007 to assume the post from Zhang after spending several years as deputy director of Jilin Province Rural Credit Bank. He was removed in October 2015 and placed under investigation in October 2018.

According to a court document released Tuesday, Gao when he was chairman of Jilin Trust received 21.4 million yuan of bribes between 2010 and December 2012 from a local developer that was a Jilin Trust client. He also accepted 71.6 million yuan of bribes from nine individuals between 2000 and 2017, some of it during his tenure as a senior official of Jilin Province Rural Credit Bank, according to the court document.

Between 2017 and 2018, Gao sent 1.1 million yuan of bribes to a former senior Jilin provincial official in a bid to avoid investigation and punishment, the court said.

Gao’s successor, Li Wei, was investigated by the province’s anti-graft authorities less than two years after he assumed the post in 2015 and was sentenced to five years in jail for bribery and abuse of power last year.

Another former Jilin Trust chairman, Tai Ge, who succeeded Li in 2018, was also charged with corruption, bribery and abuse of power and will face trial, the Supreme People's Procuratorate said Tuesday in a separate statement. Tai was placed under investigation in September 2020.

Prosecutors accused Tai of accepting a “huge amount of bribes” during his tenure as general manager and chairman of Jilin Trust as well as during his days leading Bank of Jilin before joining the trust company.

Timmy Shen contributed to the story

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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