Tiger hunt: Who's snared in China's graft fight?

China's financial sector has been a focus of Xi Jinping's attempt to crack down on graft. As three Citic Securities executives are arrested, we list those caught up.

The start of 2016 has seen no let up in Chinese President Xi Jinping’s three-year-old crackdown on graft, with the country’s financial sector put sharply in the spotlight since last summer’s market meltdowns.

Xi’s pledge was to target “big tigers” – leaders and decision-makers in the Communist Party and the private sector - as well as “small flies” who cause irritation at grass-roots level.

A number of high-ranking regulators and executives at big securities houses had come under scrutiny since the market turmoil last summer that sent the benchmark Shanghai index plunging 43%.

Some were being investigated for alleged “malicious” short-selling, insider trading or leaking inside information as the huge falls triggered an intensified clampdown on financial irregularities in an effort to smoke out malpractice and “purify” the market.

In October, the Central Commission for Discipline Inspection – the country’s top anti-graft watchdog, led by Wang Qishan, China’s anti-corruption tsar and Xi’s lieutenant  – also kicked off a broad review of the country’s financial industry.

It sent inspection teams to various financial entities, including the People’s Bank of China, the big four state-owned banks, as well as the banking, securities and insurance regulators to weed out potential financial wrongdoing and corruption.

The statistics show the extent of Xi’s graft crackdown: more than 54,000 officials were investigated by prosecutors for corruption, dereliction of duty and other duty-related crimes, and 336,000 were punished for violating discipline in 2015, according to Wang’s work report.

Imagine a campaign in the US that took down the White House chief of staff, state governors, city mayors, heads of federal regulatory agencies, the chief executives of Fortune 100 companies, and possibly Warren Buffet and you have some idea of the scale of Xi’s crackdown.

Below is a list of top Chinese financial regulators, bankers, brokerage and corporate executives who have been detained, mysteriously disappeared, or died under a cloud since last year:

 

Xu Xiang

 

The former Zexi Investment general manager, dubbed “China’s Carl Icahn”, was formally arrested for insider trading and manipulating stocks prices, official news agency Xinhua  reported on April 29, citing law enforcement agencies in Qingdao. He was dramatically detained by police on Hangzhou Bay Bridge in November 2015. His was the first case against a private securities manager since Beijing stepped up scrutiny of financial institutions last year.

 

Cheng Boming and other Citic Securities executives

 

Cheng, president of China’s largest brokerage by assets, was taken away by police for alleged insider trading and leaking inside information in September 2015, making him the highest-ranking brokerage official investigated since Beijing intensified a clampdown on market malpractice. He and two other Citic Securities executives, Liu Jun and Xu Jun, were formally arrested on criminal charges, Xinhua reported on April 29. 

Yang Zezhu

The former head of mid-sized brokerage Changjiang Securities plunged to his death in January while under investigation for suspected “disciplinary violations”

 

Zhang Yun

 

The most senior banker caught up in the campaign, Zhang left his role as head of the Agricultural Bank of China in December after his detention as part of a probe in November.

 

Guo Guangchang

 

The billionaire head of Fosun International sparked speculation when he went missing in December. After his release, China’s biggest privately owned conglomerate later clarified Guo was helping judicial authorities with an unspecified investigation.

 

Yim Fung

 

The chairman and CEO of Guotai Junan Securities’ Hong Kong unit disappeared for several weeks in  November. Yim returned to work in late December after “assisting investigations” by Chinese authorities, the company said in a filing to the Hong Kong exchange.

 

Yao Gang

 

One of four vice-chairmen at the securities regulator, Yao was placed under investigation by China’s anti-graft watchdog for suspected “serious breaches of discipline”, its terminology for suspected corruption, in mid November. Yao is the most senior securities official snared.

 

Zhang Yujun and Liu Shufan

 

Zhang, former CSRC assistant chairman overseeing brokers and fundhouses, was investigates for “serious violations of discipline” in September. Liu, a former CSRC division head and reportedly Yao’s ex-secretary, made a televised confession to bribery and insider trading the same month.

Chen Hongqiao

The head of Guosen Securities, a large Chinese brokerage, was found hanged on the balcony of his Shenzhen home in October after he was reportedly tied into an investigation into Zhang Yujun, former CSRC assistant chairman, and banned from leaving the country. Chen had been Zhang’s deputy when the latter ran the Shenzhen bourse.

Mao Xiaofeng

The president of China Minsheng Bank was detained in January 2015 to assist in a corruption investigation into Ling Jihua, the top aide to former Chinese president Hu Jintao, according to a Caixin report.  Minsheng announced in a stock exchange filing Mao, 43, stepped down “for personal reasons”.

Lei Jie

Founder Securities reported on January 22, 2015, that it had been unable to contact Lei, who chaired both Founder and its securities joint venture with Credit Suisse, for three days. He had asked for a week’s sick leave on January 12. Bloomberg reported Lei was released from police custody in November after helping with an unspecified probe.

 

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