White collar crime and the criminal justice system. Government response to bank fraud and corruption in China
| Published date | 08 May 2009 |
| Date | 08 May 2009 |
| DOI | https://doi.org/10.1108/13590790910951849 |
| Pages | 166-179 |
| Author | Hongming Cheng,Ling Ma |
| Subject Matter | Accounting & finance |
White collar crime and
the criminal justice system
Government response to bank fraud
and corruption in China
Hongming Cheng and Ling Ma
Department of Sociology, University of Saskatchewan, Saskatoon, Canada
Abstract
Purpose – The purpose of this paper is to assess the government efforts in criminalising and
combating bank fraud and corruption in China and their policy implications.
Design/methodology/approach – An integrated method is used to gather the data for this study,
including government documents, statutes, congressional reports, legal cases, news reports, online
survey and interviews with key policy-makers, investigators and prosecutors.
Findings – This research finds that a major problem of bank fraud and corruption in China is the
gigantic web of government officials, bank insiders and criminal businesses in committing fraud. The
harshness of the Chinese law has not automatically resulted in making the struggle against bank fraud
more effective. Law, enforcement and punishment are not certain, predictable, and applied consistently
in order to deter fraud. Political, ideological and legal differences have hindered China’s pursuit of
escaped criminals in foreign countries.
Practical implications – This paper indicates that a three-pronged approach – deterrence,
prevention and education – is needed to address bank fraud and corruption. The industry’s preventive
efforts are of far greater importance than any extreme penalty. There is a need for a reconstruction of
business ethics to ensure willing compliance with the law by individuals and organizations.
Originality/value – The paper is of value to law enforcement policy-makers, banking regulators,
financial institutions and academic researchers with interests in bank fraud and corruption issues.
Keywords Banks, Fraud, Corruption, Law enforcement,China, International cooperation
Paper type Research paper
Introduction
In China, bank fraud is a serious white collar crime that causes billions of dollars in
loss every year, and is considered a criminal offence even punishable by death if the
case involves corruption. During the past decade, the news media have reported
a number of high-profile bank corruption and fraud cases in the Chinese banking
industry. After their inauguration in 2003, Chinese President Hu Jintao and Premier
Wen Jiabao announced a major effort to reform the banking industry and investigate
and prosecute bank fraud and corruption. During this anti-bank fraud campaign,
several prominent bankers have received severe punishment, including two presidents
of China’s “big four” state-owned commercial banks[1].
Bank fraud is generally defined as:
[...] a criminal offense of knowingly executing, or attempting to execute, a scheme or artifice
to defraud a financial institution, or to obtain property owned by or under the control of
a financial institution, by means of false or fraudulent pretenses, representations, or promises
(Garner, 2004, p. 685).
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1359-0790.htm
JFC
16,2
166
Journal of Financial Crime
Vol. 16 No. 2, 2009
pp. 166-179
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590790910951849
To continue reading
Request your trial