China's financial anti-corruption drive enters new era

By Xie Jun Source:Global Times Published: 2019/3/11 21:03:40

Financial anti-corruption drive enters new era

Anti-corruption moves for the financial sector have entered "a new stage", an expert said on Monday, as the focus is shifting from case management, which involves regulators checking reports of corruption, to reforming the inspection mechanism so as to nip corruption in the bud. 

One such regulatory reform is the action taken by the CPC Central Commission for Discipline Inspection to delegate discipline inspectors directly to 15 central financial companies, including major banks such as the Bank of China and the China Construction Bank as well as financial giants such as China Life Insurance Co, according to a report of the Economic Observer. 

In the past, central financial companies were usually supervised by members of the companies' Party committees, who themselves are employees of those companies, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Monday. 

"Because they are employees themselves, they can hardly inspect their superiors like company presidents," Xi told the Global Times on Monday. 

There have been reports in recent months about the corruption of top managers in domestic financial companies. One example is Lai Xiaomin, former board chairman of China Huarong Asset Management Co, who was arrested last November after he was found to have violated the central authorities' principles and policies on financial work. 

Zhou Yu, director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, told the Global Times on Monday that the reform of the discipline inspection mechanism, which shifts from internal to external inspection, will help clear corruption stemming from nepotism and networking. 

Experts said that the government is gradually increasing its supervisory strength and adjusting its supervisory methods to deal with corruption in the financial sector, as potential risks arising from financial corruption have caught government attention in recent years.

"The amount of money involved is stunningly large in some financial corruption cases," Xi said. 

Zhou also said that financial corruption will cause risks to the interests of the public, which the government won't stand for. "For example, if a bank president embezzles a large sum, that might cause capital shortfalls in the deposits, and the government will have to use state-owned assets to clear up the mess," Zhou said. 

The government still has challenges such as how to adapt to China's evolving financial industry, experts said.

"For example, the financial sector is now involved with the development of the internet, so the government needs to change its management model from a separate pattern to a mixed one, which it is still exploring," Zhou said, adding that financial innovation can be a challenge for regulators as they are not familiar with such innovation and might be at a loss in managing it.

"It's important that the government should find the appropriate inspection pace and strength, neither too strong nor too weak, that can prevent risks but won't throttle efficiency in the financial sector," Zhou said. 

Newspaper headline: Financial anti-corruption drive enters new era

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