More suspects detained as rural banking scandal rolls on in Henan

Fresh suspects involved in the financial scandal surrounding several rural banks in Henan province have been detained by police, who have also unveiled the latest developments in the high-profile case that has aroused national attention.

Further investigation disclosed by police in the city of Xuchang on Sunday showed that a group led by Lyu Yi, who was effectively in control of Henan New Fortune Group, had allegedly been using several rural banks to engage in illegal activities and various crimes since 2011.

The group is suspected of controlling the banks through Henan New Fortune Group and a few other companies by financial means, such as cross-shareholding and manipulating bank executives, according to a statement from police.

The group also allegedly used a third-party internet financial platform and a self-operated platform developed by a technology company they set up, as well as a number of fund brokers, to collect and sell financial products, and then illegally transferred funds from fictitious loans, it said.

They were even suspected of setting up a company that was able to delete, modify, block and conceal data, it said.

Further suspects involved in the case have been apprehended, and a new batch of funds and assets have been sealed, seized or frozen in line with the law, it added. It was unclear if Lyu Yi has been detained or not.

Last month, police detained several people suspected of using the rural banks to commit crimes, with the handling of funds and assets.

Based on the progress of the investigation and the amount of capital and assets retrieved by the police, the Henan banking and insurance industry regulator and the province's financial affairs supervision bureau announced on Monday that they would arrange the handing out of advance payments for customers with deposits of 50,000 yuan ($7,450) or less starting on Friday. Those with more deposits will be handled later with further notice.

The authorities said on Sunday that relevant departments are ramping up the verification process for customers affected by the case and wanting to withdraw their money.

From April 18, four rural banks in Henan suspended their online services, leaving customers unable to access their funds, which has quickly aroused outrage. Later that month, Henan New Fortune Group, one of the banks' shareholders, was placed under investigation.

On May 18, the China Banking and Insurance Regulatory Commission and the People's Bank of China said that they had asked their branches in Henan to work closely with local departments to deal with the incident.

A month later, a preliminary investigation made by the Xuchang police showed that the online transaction system of the rural banks had allegedly been manipulated and illegally used by the Henan New Fortune Group.

On July 1, financial supervision authorities in Henan informed customers involved in the case to register as quickly as they could. Three days later, the four banks released similar notices on their websites that they recently elected new chairmen of the board of directors and the board of supervisors, with the approval of senior executives.

The financial scandal has sparked further public outcry over the past few months after some customers complained that their health codes had turned red for alleged non-epidemic-related reasons. At the end of last month, five people, including four officials in Henan, had been punished for abusing their power by changing the color of the codes.

caoyin@chinadaily.com.cn