Local authorities in Henan province have arrested over 200 suspects for their involvement in the failure of four rural lenders that threatened to trigger a bank run.
The public security bureau for the Henan province city of Xuchang announced on 29 August that it had arrested 234 suspects following further investigations into the affected village county banks.
“Further investigation has discovered that a criminal group led by suspect Lu Yi (吕奕) exercised illegal control of four village county banks including Yuzhou Xinminsheng (禹州新民生), and are suspected of engaging in a series of major crimes,” said the announcement.
Xuchang authorities allege that Lu Yi, who was previously the real controller of Henan New Wealth Group (河南新财富集团), had used the village county banks for criminal activity since 2011.
Henan New Wealth Group was first established in July 2011 with registered capital of 116 million yuan. Its legal representative was Yu Zefeng (余泽峰), who held 80% of equity, with Lin Hengsen (林恒森) holding the remaining 20%. The company’s business scope included industrial investment and enterprise investment and management.
According to media reports citing a ruling from the Zhengzhou Middle People’s Court, as of September 2018 Lu Yi was the chairman of Henan New Wealth.
The same ruling found that Lu had made bribes of over 23 million yuan to a executive from a Henan province bank in exchange for loans, with documents from the trial indicating that Lu Yi was the real controller of at least a dozen companies in Henan province across a range of industries, including home appliances, office equipment and trade.
While Henan New Wealth Group is implicated in the Henan province bank run scandal, a report from Sina indicates that it is not a direct shareholder in any of the four rural banks involved, being Yuzhou Xinminsheng Village County Bank (禹州新民生村镇银行), Zhecheng Huanghuai Village County Bank (柘城黄淮村镇银行), Shangcai Huimin Village County Bank (上蔡惠民村镇银行) and Guzhen Xinhuaihe Village County (安徽固镇新淮河村镇银行).
All four banks do have one shareholder in common however, being Xuchang Rural Commercial Bank (许昌农商行). Xuchang Rural reportedly does not have any affiliate relationship with Henan New Wealth.