If you’re head of a corporation,bank and/or Insurance firm and you don’t want to wake up one morning to a scenario like this in your own front garden, you should make sure you have a top FORENSIC INVESTIGATION team on side. As The Financial Times outlined on its front page on August 6, details are emerging of what could be China’s biggest bank fraud, after the former chairman of a company listed on London’s Alternative Investment Market appeared in a Chinese court last week.
Prosecutors in the southern Chinese city of Guangzhou allege that Wang Sheng, former chairman of Canton Properties – a prominent developer in southern China – obtained around $US700 million of illegal loans from the Bank of Communications, a state-controlled lender that is 18.6 per cent owned by HSBC. Wang, it appears, was the main recipient of these loans, which had been arranged with the help of a senior BoComm executive and never actually made available to the company.
Liu Changming, the former president of BoComm’s Guangzhou headquarters, seemingly fled the country soon after authorities launched an investigation in late 2007. He is still on the run despite a global alert being issued by Interpol for his apprehension.
Apparently, the loans were channelled through subsidiary companies of Canton Properties without the knowledge of shareholders, who were told that the company had no unpaid bank debt. This is a classical example of where a professional fraud investigation team – especially one skilled in computer forensics and forensic accounting, and able to work across cultural divides – could have detected such activity early on.
After Wang disappeared in August 2008, Canton Properties suspended its shares and most of the company’s board members, including Sir David Brewer, a former Lord Mayor of London, resigned. Trading in the shares has yet to resume.
Tony Knight, chief executive of Canton Properties, who was appointed in February this year to look into recovering foreign shareholders’ investments, said, “We later discovered Mr. Wang had been arrested but it wasn’t until recently that we discovered the true scale of the alleged fraud.”
Caijing, China’s leading financial magazine, says the case involves as much as $1.4 billion, which is three times as much as the largest previous reported bank fraud in China. The trial is being conducted behind closed doors. BoComm told The Financial Times that the investigation had been going on for more than two years but the bank was unable to comment on details because of the legal proceedings. HSBC executives said they were unaware of the case.
It pays to have a professional team of forensic invsitgators on side who have both the expertise and experience to handle such cases and to nip them in the bud. The highly sophisticated methods of transactional analysis and forensic accounting they use will surprise you: once seen, never ignored. They can provide you with a diagrammatic timeline of what’s going on in and around your company so that you can recognise for yourself previously unknown danger signs.
Source : Intellisec.
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