Chinese investigators have revealed frauds involving letters of credit (L/Cs) on a massive scale as they continue to crackdown on corruption in the country's banks.

At one bank alone, the authorities have unearthed a conspiracy involving hundreds of people and dozens of officials, some of whom helped a private entrepreneur forge L/Cs and other documents.

US$900 million

Investigators say that 233 people, including 80 officials of the ruling communist party, may have conspired to defraud the Industrial and Commercial Bank of China (ICBC) of 7.4 billion yuan (US$900 million).

Feng Mingchang, a Guangdong based entrepreneur, allegedly co-opted bank and government officials to forge documents in order to obtain credit from ICBC's Nanhai branch.

Arrests and dismissals

More than two-dozen of the alleged conspirators, including Feng as well as bank and government officials, have already been arrested and are awaiting trial.

Meanwhile eighty Chinese officials thought to be involved in the scandal have been sacked.

False L/Cs

According to China's Xinhua news agency, dozens of bank and government officials took bribes from Feng and helped him forge false L/Cs and other documents.

Much of the money was transferred overseas and more than two billion yuan has yet to be recovered according to a National Audit Office report cited by Xinhua.

Crackdown

China says it has scored some notable victories in a crackdown on document-based financial crimes that began in March 2004 (DC World News, 24 September 2004).

Investigators have focused on crimes involving several types of financial instrument, including L/Cs, commercial bills and credit cards.

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