Article in SCMP about shadow banking practices includes telling examples of how business is really done in China.
Conflict of interests are rife in China. When there is the opportunity for employees to use their company positions for personal gain, assume they are doing so. Even if they have to put personal interests and enrichment at the expense of company interests. Chalk this up to the lack of a moral compass in Chinese culture as the result of the communist government stamping out religion. Everything is acceptable unless caught. Company policies are not compliance in China.
Source:
"Illuminating confessions from a shadow banker", South China Morning Post, May 15, 2013.
http://www.scmp.com/business/article/1237823/illuminating-confessions-shadow-banker
CKB Solutions is all about real solutions for the real world. To learn how we can help your business, contact Greg Kovacic in Hong Kong.
Conflict of interests are rife in China. When there is the opportunity for employees to use their company positions for personal gain, assume they are doing so. Even if they have to put personal interests and enrichment at the expense of company interests. Chalk this up to the lack of a moral compass in Chinese culture as the result of the communist government stamping out religion. Everything is acceptable unless caught. Company policies are not compliance in China.
- With an average loan size of 133,000 yuan, loans of 20 million yuan loan to a fish farm and a 5 million yuan loan to a furniture store. Within a year, both defaulted.
- Undeterred by the defaults, made another 20 million yuan loan at cut-price rates and over an unusually long maturity to a small local air-conditioner company that boasted it was in line for a stock exchange listing. Discovered, the managers had accepted stock options from the company in the hope that a loan would translate into a handsome profit for themselves personally when the borrower finally listed.
- Private equity investor who used his connections with a big state bank to obtain cheap funds, which he proposed investing in local government infrastructure projects. Only his "equity" stakes would come complete with a buy-back clause, which effectively meant they were loans, disguised to allow the bank's executives to exceed both their loan quotas and their lending rate cap to pocket a handsome 25 per cent return."
Source:
"Illuminating confessions from a shadow banker", South China Morning Post, May 15, 2013.
http://www.scmp.com/business/article/1237823/illuminating-confessions-shadow-banker
CKB Solutions is all about real solutions for the real world. To learn how we can help your business, contact Greg Kovacic in Hong Kong.
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