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BEIJING (AFX) - China's banking system is not only awash with debt, but loopholes in its supervisory system have allowed 4,000 officials to flee with 50 bln in cash, state media said.
'The current loopholes in China's system of financial supervision are the main reason for the success of corrupt officials in taking a large amount of funds overseas,' Zhang Xiao, former head of the Industrial and Commercial Bank of China, said at the ongoing meeting of the National People's Congress or parliament.
Under existing banking rules, companies can open up numerous accounts in many different banks, making it easy for corrupt officials to wash money and send capital overseas, the Beijing Morning Post quoted Zhang saying.
'At present the way that enterprises wantonly open up accounts is still very serious, many enterprises have several accounts in many banks; this makes it difficult for financial supervision organs to grasp the situation of capital flight in a timely manner,' Zhang said.
'Many corrupt officials and other criminals use company accounts to hide transfers and illegal income.'
According to a report by the Ministry of Commerce, some 4,000 officials have successfully fled with 50 bln in illicit cash as of early 2005, the newspaper said.
The Chinese banking system suffers from huge non-performing loans, including 1.4 trln yuan shifted to four asset management companies created six years ago.
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