Central Commission for Discipline Inspection Office Report: Strictly crack down on high interest transfer of funds by public officials | Supervision | Finance | Loans | Problems | Public Officials | Personnel | Transfer of Loans

There are loopholes in fund supervision, taking risks and seeking personal gain

Strictly investigate high interest loan transfers by public officials

Recently, Gao Lianzhu, former Party Secretary of the Statistics Bureau of Fuzhou City, Jiangxi Province, was expelled from the Party and held public office, and was reported to be suspected of committing the crime of high interest loan conversion. According to recent reports, including Liu Xinglong, former Party Secretary and Chairman of Shaoshan Rural Commercial Bank in Hunan Province, Li Wei, former Party Secretary and Chairman of Yunnan Publishing Group Co., Ltd., and Yang Hongwei, former Deputy Mayor of Gongyi City in Henan Province, all have been involved in such issues. The issue of using power or public officials to seek profits through high interest loans has attracted the attention of disciplinary inspection and supervision agencies.

According to Article 175 of the Criminal Law, the crime of transferring loans at high interest rates refers to the act of using credit funds from financial institutions to transfer them to others at high interest rates for the purpose of making profits, resulting in a relatively large amount of illegal gains. "This type of behavior does not use credit funds for the purpose specified in the bank loan contract, but instead transfers them to others to obtain interest differentials. It is not only dishonest, but also disrupts the national order of credit fund disbursement and interest rate management, and avoids credit approval supervision, which may cause financial risks," said Mao Jiangping, a member of the Jiangshan Municipal Supervision Commission in Zhejiang Province.

The reporter noticed that the main body of high interest loan conversion is the borrower, which means that corporate entities, other economic organizations, individual businesses, and natural persons with full civil capacity may all become the main body of high interest loan conversion behavior. Luo Fosheng, Director of the Case Management Office of the Discipline Inspection Commission and Supervision Commission in Nanping City, Fujian Province, believes that public officials should be particularly vigilant when engaging in high-interest loan transfers.

High interest loan conversion uses credit funds. Luo Fusheng told reporters that the embezzlement of credit funds from financial institutions by public officials for high interest loan transfers is not unrelated to their identity, but to some extent, it implies a violation of the integrity of their positions, rather than simply a violation of personal behavior by citizens. In addition, if one takes advantage of their authority or position to proactively request loans and interest payments from management service recipients without financial needs, they may also be suspected of soliciting or accepting bribes.

According to the amount of illegal gains from high interest loan transfers, the perpetrator shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined not less than twice but not more than five times the amount of illegal gains. Party members and public officials who have committed usury on lending, even if they fail to meet the standards for criminal case filing and prosecution, according to the provisions of Article 28 of the Regulations of the CPC on Disciplinary Action and Article 41 of the Law of the People's Republic of China on Administrative Action against Public Officials, they should also be investigated for the corresponding party discipline and government responsibilities according to the specific circumstances. The cost of violating discipline and law is not high, why are there still public officials who know they cannot do it? The interviewed disciplinary inspection and supervision cadres believe that interest driven is the main factor, and the identity or position influence of public officials provides convenience for them.

Some people use their identity as public officials to easily obtain credit funds for profit.

Some people take advantage of their positions to steal from others. Jie Peng, former president of Dianchi Branch of China CITIC Bank Kunming Branch, first used his identity as the bank president to meet various types of personnel who possessed resources and had funding needs, casting a net for high interest loan transfers. Subsequently, negotiate with others to apply for a loan at their own branch and lend out at an annualized rate of 15%. Afterwards, he took advantage of his position to promote the bank loan approval process, turning a blind eye to forged loan materials, and successfully lent the obtained loan, obtaining high profits. "Jie Peng conspired with others to use his power to transfer loans at high interest rates and make a profit of 710000 yuan, exposing regulatory loopholes for these public officials," said Pu Xuefei, a cadre of the First Discipline Inspection and Supervision Office of the Wuhua District Commission for Discipline Inspection and Supervision in Kunming City, Yunnan Province.

Wang Junneng, the head of the 11th Discipline Inspection and Supervision Group dispatched by the Wuxi Municipal Commission for Discipline Inspection and Supervision in Jiangsu Province, has noticed that there is a subjective transformation in high interest loan transfers. For example, Zhao, a public official of a certain bureau in the city, applied for a credit loan at the request of his friend Zhou. After the loan was successful, he lent it to Zhou for a period of time, and Zhao and Zhou did not have a clear agreement to receive high returns. At this time, Zhao subjectively did not intend to embezzle loans from financial institutions for profit. "But afterwards, after transferring loans to Zhou again, Zhao began to receive his high interest returns. The two of them immediately reached a consensus on this high interest transfer model, and Zhao had a subjective transformation."

In addition, several disciplinary inspection and supervision officials have raised the issue of regulatory deficiencies. The reasons for this are that both the actors repeatedly transfer funds to evade supervision, and the cooperation channels between relevant departments and financial institutions have not been fully established, making it impossible to achieve full and comprehensive supervision.

The prevention and control of high interest loan transfers by public officials cannot be achieved overnight. We need to start with consolidating responsibilities, strict supervision, and warning education to jointly weave a strong prevention and control network.

The relevant person in charge of the Discipline Inspection and Supervision Commission of Wuhua District believes that the disciplinary inspection and supervision organs should strengthen the responsibilities of relevant industry departments. "Supervise the financial regulatory authorities to fulfill their duties and responsibilities, strengthen the supervision of credit granting for public officials in various financial institutions, supervise financial institutions to fulfill their responsibilities, strictly examine the purpose of public officials' loans, and eliminate the source of high interest loan transfers from the source." The disciplinary inspection and supervision authorities in Jiangshan City, Zhejiang Province, issued disciplinary inspection recommendations to relevant departments to promote effective regulatory cooperation with financial institutions, strictly control the "entry" and "exit" of public officials' loans, strictly examine the purpose of loans, strengthen dynamic control and full cycle supervision of the flow and use of loan funds, and build a "firewall" for preventing and controlling high interest loan transfers.

In combination with the newly revised "Regulations on Reporting Personal Matters of Leading Cadres", the Discipline Inspection Commission and Supervision Commission of Nanping City, Fujian Province, has strengthened the reporting and investigation of dishonest public officials, investigating whether there are problems of high interest loan transfers and illegal participation in private lending. The disciplinary inspection and supervision organs in Wuxi City, Jiangsu Province urge relevant functional departments to conduct self-examination, self correction, and rectification on the issue of high interest loan transfer, promote the formulation and improvement of relevant behavioral norms for party members and cadres, list high interest loan transfer as one of the "prohibited" behaviors, strictly implement the system of heart to heart talks and home visits, grasp the ideological dynamics of party members and cadres, and prevent and resolve potential problems.

In terms of exerting the fundamental function of education, Wenshan Zhuang and Miao Autonomous Prefecture in Yunnan Province has educated and guided public officials to consciously recognize the nature and harm of high interest loan transfer behavior through reporting typical cases, organizing watching warning education videos, and other methods, achieving the effect of reporting a case, alerting a group, and educating a group.