The former chairman of China's major state-owned bank responsible for raising funds for large-scale infrastructure projects, including the Three Gorges Dam and the Shanghai Pudong International Airport, is under investigation for letter of credit (L/C) fraud.

Former China Development Bank (CDB) chairman, Hu Huaibang, allegedly used his position to help two former highflying conglomerates obtain billions of dollars in dubious credit that helped to fuel their meteoric rises.


Hu allegedly funnelled L/Cs worth millions of US dollars to CEFC China Energy, the failed energy and financial conglomerate controlled by secretive tycoon Ye Jianming. Ye has been under investigation since last year.

The former CDB chairman also allegedly arranged finance for HNA Group to embark on a multibillion-dollar global buying spree. The group is now divesting assets to pay off massive debts.

In July, China's communist party initiated an investigation into Hu and his role arranging dubious loans to CEFC and HNA.

Anti-corruption drive

The high profile investigation is being used by the Chinese authorities to underline their campaign to clean up corruption at state-owned organisations.

CDB was a major creditor to CEFC since 2017 when the bank granted the equivalent of US$6.1 billion of credit lines to CEFC Shanghai International Group, CEFC's main business subsidiary. This amount accounted for 68.3 per cent of the total bank credit the company had obtained.

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