China’s cash crisis culprit named by police, said to have run powerful criminal gang since 2011

Name: Victims of one of China’s worst financial scandals attacked by unidentified men in white at protest
Uploaded: 2022-07-11T12:30:24.000Z
Duration: 4 min 47 s
Description: Victims of one of China’s worst financial scandals attacked by unidentified men in white at protest

Banking crisis in Henan and Anhui provinces has left thousands of China’s rural residents cut off from their savings for months, sparking protests and a violent response

Suspect and his criminal gang proliferated since 2011, and the financial fallout threatens to undermine China’s social stability and public order

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Victims of one of China’s worst financial scandals attacked by unidentified men in white at protest

Luna SunandAmanda Lee

Published: 8:30pm, 11 Jul 2022Updated: 1:51pm, 12 Jul 2022

Police in Henan province have shed new light on the alleged culprit behind arguably one of China’s largest financial scandals, in which billions of yuan worth of deposits – comprising the savings of thousands of people – were frozen in rural banks.

The dire situation has highlighted the financial risks facing lenders and savers in China’s less-developed regions, and the underlying threat this poses to public order.

After months of lamenting from the masses of anguished savers unable to withdraw cash from their accounts at small banks in Henan and Anhui provinces, authorities with the Xuchang Public Security Bureau in Henan said their investigation into the crisis was “progressing in an orderly manner”, and they identified a man still being sought by police.

“It is now further confirmed that, since 2011, a criminal gang led by the criminal suspect Lu Yi has used the Henan Xincaifu Group to have effectively controlled several rural banks, by ways of cross-shareholding, increasing capital and shares, and manipulating bank executives, among other means,” Xuchang police said in a statement on Sunday.

Police added that the gang also used third-party online financial platforms, its own platform, and a number of capital brokers to attract deposits and promote financial products.

In addition, the gang illegally transferred funds by means of fictitious loans, and set up a company to delete and meddle with data, which includes a series of serious crimes, police said.

“Recently, [police] arrested a batch of suspects and have seized and frozen funds and assets involved in the case,” the statement said. Xuchang police said last month that they had arrested the “first batch” of suspects in relation to the case, but it was not made clear on Sunday how many people have been arrested so far.

The latest announcement followed a protest that broke out on Sunday morning after tensions had been building since the scandal emerged in mid-April. An estimated 1,000 depositors gathered in front of the Zhengzhou sub-branch of the People’s Bank of China. Protesters were surrounded by local police and were recorded being beaten by unidentified men in white shirts.