Recently, the procuratorate of Fuzhou City prosecuted Gao Lianzhu for the crime of accepting bribes and transferring loans at high interest. In November last year, 53-year-old Gao Lianzhu took the initiative to surrender himself as the party secretary of Fuzhou Municipal Bureau of Statistics, and his alleged "high-interest loan transfer crime" attracted much attention.
The crime of lending at a high interest rate refers to the act of taking credit funds from financial institutions and lending them to others at a high interest rate, with a large amount of illegal income. In recent years, this crime has frequently appeared in the notification of the investigated public officials. In this way, they can easily "borrow money to make money".
Jia Fenqiang, former deputy director of the Public Security Department of Ningxia Hui Autonomous Region, borrowed 3 million yuan, and after lending it to others at a high interest rate of 5 times, he easily made a profit of more than 1.05 million yuan; Qin Guoyou, the former deputy researcher of Luzhai County Committee of Guangxi, borrowed 3.05 million yuan, and made a profit of more than 1.19 million yuan after high-interest lending; Luo Fuyang, former deputy mayor of Fuzhou City and former director of the Municipal Public Security Bureau, raised funds through bank loans, and then lent money to Chen Moumou and others at high interest rates, earning more than 6.5 million yuan.
According to relevant reports, China News Weekly covers a wide range of public officials involved in such issues, including party committees and government officials, as well as senior bank officials and state-owned enterprise executives. There are both deputy directors of the provincial public security department and grassroots cadres. Not only did they lose their public office, but they were also jailed.
Mao Jiangping, a member of the Supervision Committee of Jiangshan City, Zhejiang Province, said in an interview with the media that the advantage of public officials in obtaining credit funds has made a small number of people use their brains and even take risks and try their best.
Mao Zhaohui, executive director of the China Supervisory Society and director of the Anti-corruption and Clean Government Policy Research Center of Renmin University of China, told China Newsweek that the high-interest lending behavior of public officials often involves the influence of personal power, which is more harmful and more concealed. After they use the influence of personal power to borrow money, they raise interest rates to lend money, disrupting the financial market order and increasing financial risks.
The shadow of power behind arbitrage
According to the law, when a loan applicant borrows from a financial institution, it is necessary to state the legal purpose of the loan and the term of the loan. Because public officials can’t run enterprises through business, many cases show that they usually take out loans on the pretext of housing renovation, and then transfer them to loans at high interest rates.
Jia Fenqiang, former deputy director of the Public Security Department of Ningxia Hui Autonomous Region, is a typical case. In September 2016, Jia Fenqiang was sentenced to 15 years’ imprisonment and fined 2.1 million yuan by the zhongwei Intermediate People’s Court.
Zhongwei Intermediate People’s Court found that Jia Fenqiang obtained a loan of 3 million yuan from the bank through his friend by signing a fake house renovation contract, with a monthly interest of 5% and a loan term of one year. After the loan was issued, Jia Fenqiang immediately lent all the loans to a microfinance company at a monthly interest of 2.5%. After several loan renewals, he made a profit of more than 1.05 million yuan.
An insider familiar with the local political and legal system in zhongwei told China Newsweek that the loan took place in October 2012, when Jia was a member of the Standing Committee of Yinchuan Municipal Committee, secretary of the Political and Legal Committee, and director of the Municipal Public Security Bureau, and the bank involved was Shizuishan Bank. "At that time, other bank leaders offered to provide loans for Jia in order to close the relationship with Jia Fenqiang, but in the end he chose Shizuishan Bank."
Public officials who take loans on the grounds of housing renovation are not cases. The website of the State Supervision Commission of the Central Commission for Discipline Inspection once published a document about the case of Wang Pengxiang, former vice president of the Jiaojiang District People’s Court in Taizhou, Zhejiang.
In January 2014, Wang Pengxiang took a property under the name of his wife Ye Moumou as collateral, forged renovation contract, and applied to a banking institution for a decoration consumer loan of 2 million yuan. In November 2014, the loan reached the account of the fake decoration contractor designated by Wang Pengxiang, and then the money was transferred to Wang Pengxiang’s mother-in-law account through her company employee Xu Moumou. On the day of lending, Wang Pengxiang immediately lent the money in his account to three stakeholders to earn the interest difference. According to the investigation, the interest income collected from Wang Pengxiang’s reloaning was as high as 1,504,800 yuan, and the interest on bank loans was 320,200 yuan, resulting in illegal profits of nearly 1.2 million yuan.
There are also cases that show that some public officials consciously have no hope of promotion, and they want to make a fortune by lending at high interest. At the beginning of 2009, Wang Moumou, a friend of Qin Guoyou, a deputy researcher of Luzhai County Committee in Liuzhou City, Guangxi Province, who was engaged in real estate business, learned that there were many sets of idle properties for rent when he was short of funds and difficult to borrow, and told Qin that it was a waste of resources to use the property only for rent. Wang Moumou advised Qin Guoyou to mortgage the property to the bank to get a loan from it, and then lent the loan to him, promising to give Qin Guoyou 50% interest every year.
At that time, Qin Guoyou had worked as a deputy researcher of the county party committee for six years, and he thought, "Since ‘ Guanlu ’ Poor, turn away ‘ Trade routes ’ " That’s fine. From 2009 to 2013, in the name of herself and her daughter, Qin borrowed from Guangxi Luzhai Rural Cooperative Bank for four times (totaling 3.05 million yuan) on the grounds of purchasing excavators, and then lent the loans to Wang Moumou and Zhang Moumou, and charged interest. After investigation, Qin Guoyou made a total profit of 1.19 million yuan through high-interest lending.
In 2015, the Liuzhou Municipal Commission for Discipline Inspection interviewed him. When interviewed, he took the initiative to explain the fact that high-interest loans were transferred, but he believed that "this kind of behavior is only engaged in profit-making activities in violation of regulations, and it is enough to carry a punishment, and there is no need to return the illegal income." When the organization department asked him to hand over the illegal income, he refused to hand it over on the grounds that he had no money.
On February 14th, 2019, Qin Guoyou was sentenced to three years’ imprisonment by the People’s Court of Chengzhong District, Liuzhou City, for committing the crime of loaning at a high interest rate, recovering illegal income of 1.19 million yuan and fined 1.5 million yuan.
According to an interview with China Newsweek, many officials at the departmental level are also involved in the problem of high-interest loans. For example, Luo Fuyang, former deputy mayor of Fuzhou City, Jiangxi Province and former director of the Municipal Public Security Bureau, made a profit of more than 6.5 million yuan through illegal lending at high interest rates. Ye Shengkun, former deputy director of the Standing Committee of Meizhou Municipal People’s Congress in Guangdong Province, and Laynamor’s F, former deputy director of the Standing Committee of Yingkou Municipal People’s Congress in Liaoning Province, and other officials who fell off the horse, also mentioned the suspected crime of lending at high interest rates.
Many cases show that there is a complete interest chain in the case of public officials transferring loans at high interest rates. This chain is centered on public officials, down to the enterprises or individuals who actually use this loan, up to the relevant person in charge of the lending financial institution, and there are agents in the middle.
Baoping Li, a researcher at the Institute of Sociology and Law of Ningxia Academy of Social Sciences, said in an interview with the media that the business owners borrowed usury from leading cadres, in addition to the need for capital turnover, and more importantly, in order to maintain the relationship, which can be said to be a disguised form of interest transfer.
The "financial ghost" in the secret chain
"Half-monthly Talk" once commented that in some high-interest lending cases, some leading cadres repeatedly borrowed a large amount of money from banks on the grounds that their houses needed renovation, and the "renovation loans" of millions of dollars obviously exceeded the normal renovation demand. These obvious irrationalities reflected that financial institutions had management loopholes in the use of funds for loans involving public officials.
Why are financial institutions willing to lend to public officials at low interest rates? According to an interview with China News Weekly, because public officials have stable jobs and salaries, they are relatively high-quality customers for financial institutions, so they will formulate corresponding preferential policies for specific groups such as public officials.
An interviewed public official in the political and legal system told China Newsweek that many bank staff even took the initiative to go to his unit to promote credit business. "They took photos of our work documents and asked us to fill out a form, so they could get a loan of 300,000 yuan, or even more, and the loan interest rate would be obviously favorable. Although the salesperson said that the funds could not be used for high-interest loans and other purposes, there was no follow-up management. "
Mao Lixin, executive director of the Criminal Defense Research Center of China University of Political Science and Law and director of Beijing Shangquan Law Firm, told China Newsweek that the frequent occurrence of such cases revealed that financial institutions had certain problems in pre-loan review, loan management and post-loan tracking. In the pre-loan review stage, financial institutions neglected to review their loan contracts because they regarded public officials as "quality customers", and even turned a blind eye; In the process of issuing loans, the direction and practical use of this money were not carefully checked; After lending, it is rarely monitored whether the funds are used according to the agreed purpose.
He said that in such cases, if the financial institution finds that the purpose written in the loan contract is false and continues to lend, the amount is more than 2 million yuan or the direct economic loss is more than 500,000 yuan, the relevant staff of the financial institution is suspected of committing the crime of illegally issuing loans.
Even so, there are still people in charge of financial institutions who play the role of an "inside ghost" for reasons such as the exchange of interests with public officials, and illegally lend money to help public officials make profits through high-interest loans.
In May 2018, the Supervision Committee of Zhengzhou City Commission for Discipline Inspection received a clue from the Supervision Committee of Henan Provincial Commission for Discipline Inspection about Yang Hongwei, deputy mayor of gongyi city, who was suspected of violating the law. Among them, some people reported that Yang Hongwei used his power to obtain large amounts of funds from banks for lending, so as to obtain high interest.
According to the circular, in 2013, Wang Moufan, then director of Beishankou Rural Credit Cooperatives in Gongyi, thanked Yang Hongwei for his help in completing the storage task of the rural credit cooperatives, and agreed with Yang Hongwei to borrow 2 million yuan from Beishankou Rural Credit Cooperatives in the name of his brother Yang Moujun by signing a false contract, and Wang Moufan lent it to a real estate company, and the high interest of 1.02 million yuan obtained was dominated by Yang Hongwei.
According to the circular, Yang Hongwei’s modus operandi is hidden, and whether he borrows money from rural credit cooperatives or enterprises, he does it through "agent" Yang Moujun, while Yang Hongwei gains benefits from stealth.
There are also some principal responsible persons of financial institutions who even steal from themselves and start the business of lending at high interest. Kong Caimei, a former vice president of Yunnan Fudian Bank, was told that although she was paid millions of dollars a year, she was not satisfied, and she was thinking about how to make Qian Shengqian and interest. In the process of approving the loan, she learned that many private entrepreneurs were short of funds, which gave birth to the idea of usury. Kong Caimei borrowed the money she raised at high interest rate, "being a bank president during the day and a banker at night". After investigation, Kong Caimei was suspected of many illegal and criminal acts such as corruption, bribery, and high-interest lending, and the total illegal income was more than 31.8 million yuan.
Peng Xie, the former president of Dianchi Sub-branch of Kunming Branch of China CITIC Bank, first got to know all kinds of people with resources and capital needs as the president of the bank, and cast a net for high-interest lending. Then he negotiated with others to apply for a loan at his own branch and lent it at an annualized income of 15%. Since then, he took advantage of his position to promote the "green light all the way" of the bank loan approval process, turned a blind eye to the forged loan materials, and successfully lent the obtained loans to obtain high profits. After investigation, it used its authority to transfer loans at a high interest rate and made a profit of 710,000 yuan.
Gu Chao, a graduate tutor at Yangzhou University Law School, told China Newsweek that in the case of "inside job stealing" by the principal person in charge of such financial institutions, whether there is greater social harm due to their status will be considered, and comprehensive consideration will be given when sentencing. At the same time, the identity of this group also determines that they may be accused of lending at high interest and illegally issuing loans.
Why are not many people investigated for criminal responsibility?
The crime of loaning at high interest is a new crime in the criminal law in 1997. According to the amount of illegal income from loaning at high interest, the perpetrator will be sentenced to fixed-term imprisonment of not less than three years but not more than seven years, and fined not less than one time but not more than five times the illegal income.
Wang Xin, a professor at Peking University Law School and vice president of the Financial Legal Behavior Research Association of China Behavioral Law Society, told China Newsweek that the background of this crime was very special. In 1997, there was no crime of lending at high interest in the draft revised criminal law submitted to the National People’s Congress for deliberation. However, during the discussion of the two sessions, some NPC deputies from the banking sector advocated adding this crime. Their reason is that after the loan was issued, many borrowers did not use it for the purpose they claimed when applying, but lent it to others at high interest rates and ate the interest difference.
"These representatives believe that this part of the loan was originally used in projects related to the national economy and people’s livelihood, but it was used in other projects, and it is easy to cause loan risks after lending. In the end, the legislature adopted this proposal and added this crime in the adopted draft. " Wang Xin said.
Gu Chao said that when the crime of high-interest lending was added to the criminal law, all banks in China were owned by the whole people. At that time, the establishment of this crime was also considered from the perspective of the security of state-owned assets and the security of credit funds of financial institutions.
He told China Newsweek that in judicial practice, the crime of loaning at high interest may be mixed with some crimes in the downstream (if some of them are included in the crime of money laundering), and some cases may not be reflected as a separate crime. In addition, some cases are classified and not open to the public, so it is difficult to make statistics on the number of cases involving this crime over the years since its establishment. However, from the public notice, cases involving such crimes are still common in recent years.
Tong Xiaohui, the first-class police chief and public lawyer of Gongshu Branch of Hangzhou Public Security Bureau, said in an interview with China News Weekly that in cases involving high-interest lending, if the high-interest lender pays off the loan within the agreed time and does not cause losses to the bank, it is rarely exposed. Moreover, when such personnel transfer loans at high interest rates, they may not necessarily explain the source of funds to the lending target. "For the economic investigation department of the public security organ, compared with fund-raising fraud and contract fraud, high-interest lending will be more concealed."
Tong Xiaohui said that there are two main types of clues for public security organs to receive high-interest loans: the high-interest lenders did not pay off the bank loans, and the banks took the initiative to report the case after discovering the clues; The Commission for Discipline Inspection and Supervision found clues that public officials involved in high-interest loans and transferred them to public security organs.
A cadre of discipline inspection and supervision in Zhejiang Province told China Newsweek that it is not uncommon for enterprises and public officials to lend at high interest in practice, but not many people are investigated for criminal responsibility for this crime in practice. "Public officials’ duty crimes are under the jurisdiction of the Supervisory Committee, and the crime of lending at high interest is under the jurisdiction of the public security organs. In the face of a large number of high-interest loans, law enforcement officers will not and cannot all be sentenced. If such public officials have a good attitude, the supervisory Committee will generally not transfer clues to the public security and investigate the crime of lending at high interest. "
Many interviewees also said that the public knows most about the crime of accepting bribes and corruption when public officials violate the criminal law, and they have very limited knowledge about the crime of loaning at high interest, which also makes some people unaware that this is an illegal act even if they know that there are people around them. Some interviewees also said that the public officials around him thought that it was normal to transfer loans at high interest rates, and even this was a smart person who could manage money.
In addition, Mao Zhaohui believes that the crime of high-interest lending in criminal law has not been revised so far. With the emergence of some new manifestations in judicial practice, criminal acts have become more complicated, some involving illegal acts and some involving disciplinary acts. Crimes involve a wider range of people, including government, political and legal organs, officials of the financial system, etc., and some also involve agents. He believes that it is necessary to introduce judicial interpretations to further refine different situations.
In real cases, compared with the fact that public officials can usually get loans by virtue of credit, private entrepreneurs often need mortgage loans. The more poorly managed, the more difficult it is for enterprises to get loans. This is also considered to be one of the reasons why private entrepreneurs raise interest rates and transfer loans through channels such as public officials.
Gu Chao has done research, and the loans of business owners are generally mortgage loans, and the total amount of loans will not exceed 60% or 50% of the valuation of real estate or chattel market.
Shen Yufu, the legal representative of Hunan Zhanhong Construction Engineering Investment Co., Ltd., told China Newsweek that in 2009, he was in urgent need of funds because of problems in business operation, and wanted to borrow 10 million yuan from a local bank. Therefore, he mortgaged several sets of his own properties with a total market valuation of about 20 million yuan to the bank, but he still failed to obtain bank loans.
Shen Yufu said that in desperation, he raised interest rates and lent more than 6 million yuan to public officials in Xiangtan’s political and legal system through agents.
Several interviewees, including Wang Xin, told China Newsweek that banks should fully evaluate the actual needs of those at the end of the interest chain of high-interest lending (referring to the "lenders" who finally take over the offer, such as private entrepreneurs), and give them more loan support to make the high-interest lenders lose their existence space.
Mao Zhaohui pointed out that the high-interest lending behavior of public officials involves a wide range and has the characteristics of professionalism and concealment. The crackdown can not only rely on the discipline inspection and supervision organs, but also strengthen the collaborative supervision supported by big data supervision, and investigate and punish it through various forms such as inspections, inspections, discipline inspection and supervision, and auditing.
Recently, "China Discipline Inspection and Supervision Newspaper" issued a document quoting several discipline inspection and supervision cadres, saying that there is still a lack of supervision on high-interest lending. Among them, both the actors repeatedly transfer funds to avoid supervision, and the cooperation channels between relevant departments and financial institutions have not been fully opened, so it is impossible to achieve full coverage supervision.
Wang Xin believes that in the future, banks should strictly examine borrowers, establish a loan credit system, and cancel their future loan qualifications for those involved in high-interest lending. After lending, banks should follow up and supervise the use of loans and punish them in time when problems are found.
According to the article in the China Discipline Inspection and Supervision Newspaper, the supervisory committees of multi-disciplinary committees have taken measures to supervise the high-interest lending behavior of public officials. For example, the relevant person in charge of the Supervision Committee of the Wuhua District Commission for Discipline Inspection in Kunming City, Yunnan Province believes that the discipline inspection and supervision organs should urge the financial supervision departments to perform their duties, strengthen supervision over financial institutions to carry out credit granting for public officials, and strictly examine the use of public officials’ loans. The Supervision Committee of the Commission for Discipline Inspection of Nanping City, Fujian Province, combined with the newly revised "Regulations on Reporting Personal Matters of Leading Cadres", strengthened the briefing and problem investigation of untrustworthy public officials, and investigated whether there were problems of high-interest lending and illegal participation in private lending.
Published in China Newsweek magazine, No.1103, August 7, 2023.
Magazine title: Why do public officials lend money at high interest frequently?
Reporter: Zhou Qunfeng (zhouqunfenghaoren@163.com)
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