Retired Bank Regulator Admits Taking $62 Million in Bribes, Court Statement Shows

Xue Jining pleaded guilty to charges that he took $62.1 million in bribes. Photo: The People's Procuratorate of Hohhot

A retired banking regulator in the Inner Mongolia autonomous region admitted taking bribes amounting to more than $60 million in a corruption case with links to Baoshang Bank Co. Ltd., a failed local lender that was taken over by the state in 2019.

Xue Jining, a former head of the Inner Mongolia branch of the now-defunct China Banking Regulatory Commission (CBRC) and a former central bank official, pleaded guilty to charges that he took 400.4 million yuan ($62.1 million) in bribes from 37 individuals and entities from 2002 to 2015, according to a statement (link in Chinese) released Wednesday by the Intermediate People’s Court of Hohhot where his trial is taking place.

Xue abused his power to seek benefit for those who paid him bribes related to granting licenses, conducting on-site inspections and off-site supervision, approving loans, and establishing or buying stakes in village banks, prosecutors alleged at Wednesday’s hearing. He had previously been accused of (link in Chinese) illegally issuing approvals for village banks that contravened the central government’s original intention in establishing such lenders, engaging in profit-making activities and abusing his power to help his son make money.

Xue is one of several former officials at the local banking regulator to be prosecuted for corruption in the wake of investigations into the collapse of Baoshang Bank which was seized from private conglomerate Tomorrow Holding Co. Ltd. in May 2019. The bank’s high leverage, poor lending practices and corrupt activities had built up risks that regulators feared could threaten the stability of the banking system. Subsequent investigations found a 220 billion yuan hole in the bank’s books due largely to massive misappropriation by Tomorrow Holding, whose billionaire founder Xiao Jianhua was placed under investigation by anti-corruption authorities in early 2017.

Xue, 66, was Communist Party secretary and head of the CBRC’s Inner Mongolia branch from 2007 to 2014 before retiring in 2015. He worked for the People’s Bank of China from 1985 to 1999 and was appointed deputy director of the supervision bureau of the CBRC in 2003 when the agency was set up. The commission was merged with the insurance watchdog in 2018 to form the China Banking and Insurance Regulatory Commission (CBIRC).

Xue was expelled from the party in January 2021 after he fell under investigation in June 2020. The Central Commission for Discipline Inspection, the party’s top antigraft agency, said in an announcement (link in Chinese) that Xue was found to have tolerated the barbaric expansion and illegal operation of Baoshang Bank, which partly contributed to the “severe credit risks” at the lender.

Chen Zhitao, a deputy director of the local banking regulator from 2004 to 2011 and retired in 2013, and Song Jianji, a deputy director from 2004 to 2014 before retiring in 2017, were also expelled from the party in January. Song stood trial in December 2020, accused of taking bribes of more than 229 million yuan between 1995 and 2017 when he worked at the regional branches of the central bank and the CBRC.

Liu Jinming and Jia Qizhen, both former officials at the Inner Mongolia branch of the CBIRC were put under investigation by graft busters in 2019 and were later expelled from the party and removed from public office.

Several top executives at the failed regional lender have also been detained as part of an investigation by Inner Mongolia into the bank’s collapse, sources with knowledge of the matter told Caixin late last year. Li Xianping, former Communist Party secretary and chairman of the board of supervisors, is one of the key figures under investigation by Inner Mongolia’s anti-corruption authority, the sources said.

Pan Huisheng, who was assistant president of the bank and a former head of the lender’s Shenzhen branch, was taken into custody in Inner Mongolia where the bank is based, multiple sources with knowledge of the matter told Caixin in December.

Baoshang Bank was the first Chinese lender to be taken over by the state in two decades. As part of a restructuring to clean up the bank, its good assets were taken over by Mengshang Bank Co. Ltd., a new bank set up specifically to deal with the fallout from the lender’s collapse, and Hong Kong-listed Huishang Bank Corp. Ltd. The rump of its assets was kept in the old Baoshang Bank and, in November 2020, the CBIRC gave its formal approval for the lender to start bankruptcy proceedings which were finalized in February.

Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Nerys Avery (nerysavery@caixin.com)

Download our app to receive breaking news alerts and read the news on the go.

Get our weekly free Must-Read newsletter.