Caixin
Aug 16, 2021 08:07 PM
FINANCE

Graft Buster Reveals Details of Corruption in China’s Rural Credit System

What’s new: China’s top anti-graft agency has disclosed details it has uprooted about several high-profile corruption cases in the country’s rural credit system, which provides the financial backbone for people and businesses in the countryside.

Two of the most prominent and well-documented cases disclosed by the Central Commission for Discipline Inspection (CCDI) were found at the Anhui Rural Credit Union in East China’s Anhui province, and the Yunnan Rural Credit Union in the southwestern province of Yunnan.

Chen Peng, a former Communist Party committee chief at the Anhui credit union, took bribes worth more than 60 million yuan ($9.3 million) from the general manager of Huaxia Life Insurance Co. Ltd., surnamed Deng, according to a CCDI statement (link in Chinese) released Monday. In return, Chen promoted Huaxia Life’s insurance products within the province’s rural credit system from 2011 to 2019. Over 50 local rural commercial banks bought the company’s insurance products, with the total premiums amounting to 9.7 billion yuan.

Chen was placed under investigation in April 2020 and was later found to have taken bribes worth more than 78 million yuan in total. He was expelled from (link in Chinese) the party and dismissed from public office in November.

Luo Min, a deputy chief at the Yunnan credit union’s party committee, took more than 1 million yuan in bribes and a painting worth 240,000 yuan from Gui Yong, a local property developer. In return, Luo abused her power to help Gui get loans and sell properties, the CCDI statement said.

The background: Rural financial networks covering China’s vast countryside, with rural credit unions as nexuses, were formed as part of the government’s long-term plans to modernize rural financial institutions. But the systems have long been a weak point for regulatory oversight. Since 2015, several high-profile corruption cases have been exposed involving rural financial officials, including extensive graft webs surrounding provincial rural credit unions in Yunnan, Shanxi and Anhui.

Related: In Depth: Banking Sector Cleanup Puts Local Governments in the Firing Line

Quick Takes are condensed versions of China-related stories for fast news you can use.

Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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