Le­gal wran­gles land top ICBC of­fi­cial in the dock

China Daily (Canada) - - BUSINESS - By JIANG XUEQING jiangx­ue­qing@ chi­nadaily.com.cn

A se­nior ex­ec­u­tive of the na­tion’s largest State-owned com­mer­cial­bankis in­volved in a two-front bat­tle with the law.

ZhangHongli, se­nior ex­ec­u­tive vice-pres­i­dent of In­dus­trial and Com­mer­cial Bank of China Ltd, is su­ing his per­sonal bank over in­vest­ment losses. At the same time, he is be­ing sued by a for­mer em­ployer over the cross-bor­der trans­fer of $3.9 mil­lion.

Zhang, his wife and the trus­tees of his fam­ily in­vest­ment trust are su­ing Sin­ga­pore­based DBS Group Hold­ings Ltd. The plain­tiffs said their in­vest­ment ve­hi­cle lost mil­lions of dol­lar­son­com­plex for­eign-ex­change prod­ucts and they did not un­der­stand the risks in­volved.

Lawyers for DBS have ar­gued that Zhang and his wife were so­phis­ti­cated in­vestors and his wife steered the in­vest­ment de­ci­sions.

“DBS takes the plain­tiffs’ al­le­ga­tions very se­ri­ously. DBS is of the po­si­tion that the claims made by Zhang and his wife are with­out merit and will not suc­ceed. DBS is con­fi­dent the claims will be dis­missed. The case is now pend­ing a ver­dict from the judge,” DBS said in a state­ment to China Daily.

In another case that has at­tracted much wider at­ten­tion, Deutsche Bank AG, Ger­many’s largest lender and Europe’s big­gest in­vest­ment bank, sued Zhang over the trans­fer of $3.9 mil­lion from its Hong Kong branch to an off­shore bank ac­count of a company named Harper­skille Ltd at the China Mer­chants Bank’s branch in Shen­zhen.

Be­fore join­ing ICBC in April 2010, Zhang worked for 10 years at Deutsche Bank, where he held var­i­ous se­nior man­age­ment ti­tles, in­clud­ing chair­man of Deutsche Bank (China) Co Ltd.

The Ger­man bank filed the law­suit in­HongKon­gonAug8. In court pa­pers, the bank al­leged thatZhangin­ducedit to trans­fer the money and breached his con­tract. It is seek­ing da­m­ages of $6.3 mil­lion, in­clud­ing the prin­ci­pal and in­ter­est of more than $2.3 mil­lion.

The court doc­u­ments did not give fur­ther de­tails and Deutsche Bank de­clined to com­ment.

Zhang said his ac­tions were in line with bank reg­u­la­tions and the law. He said the dis­pute would be re­solved through le­gal means and it is not re­lated to ICBC, Bei­jing­based Caix­inMe­dia re­ported.

Deutsche Bank told ICBC about the suit be­fore fil­ing the case in Hong Kong, and ICBC re­ported the case to the China Bank­ing Reg­u­la­tory Com­mis­sion, a source fa­mil­iar with the mat­ter told Caix­inMe­dia.

It is un­usual to see cases like this on the pub­lic stage be­cause for­eign banks typ­i­cally make great ef­forts to build con­nec­tions with Chi­nese of­fi­cials to win con­tracts from State-owned en­ter­prises. An­a­lysts said the money trans­ferred could be com­mis­sions sent to a third party for help­ing Deutsche Bank get a deal.

Upon Zhang’s ap­point­ment as vice-pres­i­dent of ICBC, the Ger­man bank said in a press re­lease: “Chi­nese au­thor­i­ties have been in close li­ai­son with Deutsche Bank in relation to this ap­point­ment, which is the first se­nior man­age­ment po­si­tion at a ma­jorChi­ne­se­bankto be filled ex­ter­nally by an ex­ec­u­tive from a for­eign bank.”

Michael Cohrs, then head of global bank­ing at Deutsche Bank, said that Zhang “has made a valu­able con­tri­bu­tion to the de­vel­op­ment of the bank’s fran­chise in China and our global bank­ing plat­form in Asia Pa­cific”.

The US Se­cu­ri­ties and Ex­change Com­mis­sion has been in­ves­ti­gat­ing in­vest­ment banks op­er­at­ing in China over the hir­ing of rel­a­tives of of­fi­cials or giv­ing them money in re­turn for business, the New York Times said in a re­cent re­port.

By de­pict­ing the money trans­fer as Zhang’s per­sonal act, the Ger­man bank is try­ing to get around any US in­ves­ti­ga­tion, an­a­lysts said.

• Oc­to­ber 2004

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