Caijing, China's popular business magazine, reported that the provincial pension fund was found short RMB800mn (US$96.4m). Subsequent reports put overall losses due to theft at RMB1bn.
Investigators combing through a sub-branch of Bank of China (BOC) discovered that RMB180m deposited by the Heilongjiang Provincial Social Security Fund Administration had gone missing – on top of individual pension contributions which disappeared, too. The main suspect in the alleged fraud was identified as manager Gao Shan, who reportedly began stealing in 2000, before wiring himself RMB200m and fleeing to Canada.
This was yet another black mark on the BoC. Former top executives at the bank's huge Hong Kong branch were detained over irregular activities last year. The Harbin heist news comes at a difficult time. The BoC, China's largest foreign exchange bank, is planning a US$1bn IPO later in the year. But bank officials insisted the pension rip-off was an isolated incident and that the flotation would proceed as planned
In other money-losing news, three of China's biggest brokerages posted combined losses of more than US$800m after their financials were restated under new accounting rules requiring companies to list stock investments in their books at market value. Haitong Securities Co, Shenyin Wanguo Securities Co. and Guotai Junan Securities Co. – none of which is listed – disclosed the losses in statements filed with China's interbank market. Bloomberg said most of the losses were booked as adjustments to previously reported earnings periods, enabling all three companies to say they were profitable in 2004. Haitong, China's biggest brokerage by net assets, was the biggest loser, dropping US$357m.