Shenzhen-listed Luzhou Laojiao and the disappearing RMB200m term deposits; CBRC Warns Public Not to Fall for High-Interest Scams at Banks; Regulator provides details of fraud schemes involving banks in Changsha and Hangzhou, then says people shouldn’t be so greedy

http://english.caixin.com/2015-02-05/100781920.html

CBRC Warns Public Not to Fall for High-Interest Scams at Banks; Regulator provides details of fraud schemes involving banks in Changsha and Hangzhou, then says people shouldn’t be so greedy

By staff reporter Gao Xinli

(Beijing) – The banking regulator has warned the public to be wary of scams that attract depositors with the lure of high interest rates, citing two cases in which depositors at two banks lost large amounts. The China Banking Regulatory Commission (CBRC) made the warning on February 4 on its account on WeChat, a popular social media app. It also provided details of some of the tricks scammers were using on depositors. The CBRC first brought up the case of Luzhou Laojiao Co. Ltd., which Caixin has reported filed a lawsuit in October against a branch of Agricultural Bank of China in Changsha, in the central province of Hunan, over the loss of one term deposit. The Shenzhen-listed liquor manufacturer said it made term deposits of 50 million yuan and 150 million yuan with the bank in April 2013. When the second deposit reached its maturity date in September last year, the company checked on the money, but the bank told it the deposit was gone. The CBRC said in its WeChat post that Luzhou Laojiao was the victim of fraud and then provided details of the scam. Several people passing themselves off as bank clerks contacted Luzhou Laojiao about deposit opportunities that offered high interest yields.Company employees unwisely gave away important information and seal samples necessary for making documents official, the CBRC said. The fraudsters then used the company information and a forged seal to open a new account so they could withdraw the 150 million yuan.

The regulator said the blame was largely on the company because its employees failed to make sure the bank clerks were genuine.

Luzhou Laojiao’s lawsuit is still pending.

The second scam mentioned by the CBRC involved 42 depositors in Hangzhou losing 95.05 million yuan. The losses came to light when one depositor told police he had lost 2 million yuan he put into a local commercial bank.

The CBRC said the depositors were approached by people on the premises of the bank who offered annual returns of 13 percent on deposits, and that bank employees may have been in on the fraud.

The bank customers were led to a building across the street, where the scammers had them sign a pledge not to make inquiries into their accounts or tell their friends about the good deals they were getting.

The CBRC did not seem to have much sympathy for the Hangzhou depositors, asking: “Should they have questioned if this was a normal way of making a deposit?”

However, it said some bank employees have been implicated in scams to steal deposits and in these cases it would hold banks accountable.

The regulator urged the public to be wary of promises of high rates of return.

“Greed is the foundation for swindlers to succeed,” it said. “If you can resist the temptation, you won’t fall into the trap.”

The regulator did not mention the discovery of a fake bank in the eastern city of Nanjing. About 200 depositors entrusted about 200 million yuan with what they thought was a legitimate bank since April 2013, again on the promise of high returns.

The fake bank had registered as a rural co-operative providing consulting services, but then passed itself off as a real bank complete with the expected decorations and furniture.

Several people linked to the scam have been taken into custody. Police did not say what happened to the money.

Critics have said officials in Nanjing should have discovered the fraudulent operations earlier.

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