Three people have been indicted in Manhattan's Federal District Court on charges that they defrauded the New York branch of the Bank of China (BoC) out of more than US$25 million.

Letters of credit (L/Cs) featured prominently in the scams that the accused are believed to have perpetrated against the bank.

Bank manager bribed

Quoting a spokesman for a US attorney, the New York Times says the indictment charges that from 1991 to 2002, John Chou, and his wife, Sherry Liu, conspired against the BoC so that it paid L/C beneficiaries that were in fact companies owned by Chou and Liu. The bank allegedly extended other types of trade financing to the couple for bogus transactions.

Officials said that Chou and Liu bribed former BoC bank manager Young to participate in the scheme, and used the proceeds to extend loans to their businesses and to enrich themselves and their family, according to the paper.

Fall from grace

The scam is one in a catalogue of wrongdoings at BoC that precipitated the fall from grace in China of Wang Xuebing, who used to head the New York branch before he returned to China take to become BoC chairman and establish a reputation for himself as one of the leading lights in China's banking sector reforms.

A Beijing court sentenced Wang in December 2003 to a 12-year jail term after he was found guilty of embezzlement and accepting bribes. The former BoC chairman was general manager of the New York branch in the period when the frauds perpetrated by Chou, Liu and Young were allegedly committed.

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