As it continued preparations for its planned offshore listing, it revealed it was investigating a RMB600m mortgage fraud dating from 2002 at its main branch in Beijing. The scam was alleged to involve Hong Kong developer Beijing Huayunda, which is accused of using fake identities to procure mortgages through an inside confederate, Xu Weilian, then deputy director of the bank's retail unit. He allegedly accepted an RMB8m "gift" for his role in arranging loans against units in the still uncompleted Senhao Apartment development in east Beijing's Chaoyangmen district.
Meanwhile, a corruption inquiry at China Construction Bank, also IPO-bound, took a new turn when Beijing-based Grace & Digital Information Technology filed a suit in the US, alleging that US-based Fidelity National Financial Inc paid a $1m bribe in 2002 to the recently departed chairman of China Construction Bank in order to win software contracts worth more than US$175m.
Fidelity immediately denied the charge. But where the bank's just-resigned chairman stood on the question could not be known. Zhang Enzhao resigned abruptly in March, just as an investigation into the bank's IT equipment purchases was picking up steam. The suit alleged the president of Alltel Information Services – which Fidelity (no relation to the fund company) acquired in 2003 – schemed to freeze Grace out of software work.
A third state lender also made news, the Bank of Communications announcing it had "punished" one in 20 employees for either corruption or incompetence in 2004.