2014-08-21

Fake Invoices Used to Defraud Banks a Widespread Phenomena

By now, China watchers are familiar with stories such as Steel Trade Lawsuits Explode; Banks' Unceasing Nightmare; Defendants Flee;
Qingdao Port Scandal Grows: Multiple Court Cases; 9 Banks, 29 Companies Involved So Far; Money Went Into Real Estate Speculation
and Credit Guarantee Firms Go Down Like Dominoes.

One method of fraudulent borrowing was to use fake invoices to back loans. The stories such as in Qingdao are big headline generating cases due to the numbers and players involved. Foreign banks and global commodity markets are affected by the large cases, but the phenomena is more widespread.

Take this case: 七家关联公司左手倒右手 虚假购销合同骗取承兑汇票近4亿. The headline tells most of the story: seven related companies move goods from the left hand to the right and create fake sales contracts. The defendents defrauded banks of nearly ¥400 million, though losses will be smaller.

Most interesting: the case is from 2012 and only went to court this year. How many cases will emerge in the coming years, and how many banks are not reporting their potential losses from these cases?

21st Century Business Herald storm Piandai based trade finance, there is a growing trend.

Recently, the 21st Century Business Herald reporter was informed, Binzhou City, Shandong Province, the Intermediate People's Court upheld the verdict of the case together with the fraud bill acceptance. Binzhou City, Shandong Province Boxing Kwak and his wife set up, including Zibo Yong Chi Automobile Sales Co., Ltd. (hereinafter referred to as "Wing Chi car"), including Shandong Venture Automotive Limited (the "Hong Chang Automotive"), etc. The seven affiliated companies, through false purchase and sale contract between associated enterprises, defrauding ICBC , Qi commercial banks, Shandong Boxing rural cooperative banks, the Agricultural Bank totaling 391 million yuan, 180 million yuan exposure part.

Informed sources said that in the absence of real trading situation, 郭某利 affiliate with seven false purchase and sale contract, after obtaining the funds used to repay debt. After the August 2012 funding strand breaks, acceptances and more companies repaid by guarantee, to guarantee companies and banks caused a partial loss.

The end of 2013, Boxing County People's Court of the Wing Chi cars, Venture Automotive, Shandong Venture Logistics Limited, Silver Star Auto Trade Co., Ltd. Qingdao, Shandong Province Boxing Venture Automotive Co., Ltd., Shandong Province Boxing Xian Chi Hui Xin Logistics Ltd., Shandong Province Boxing Venture Industry and Trade Co., bill acceptance and fraud Kwak and other crime case.

Verdict reporters obtained shows 郭某利 signed with the above seven false purchase and sale contracts, defrauding bankers' acceptances 11 times, a total amount of 391 million yuan, and some amount of exposure to 182.3 million yuan.

Binzhou coast of India which ICBC branch of acceptances two, worth a total of 40 million yuan, 16 million yuan exposure; Qi Boxing Commercial Bank branches, the amount of 15 million yuan, 7.5 million yuan exposure; Rural Cooperative Bank Branch Pang worth a total of 3600 yuan, 10.8 million yuan exposure; Penang branch of the Agricultural Bank acceptances handle business six times, worth a total of 300 million yuan, 146 million exposure.

Kwak used in other ways is not wise, is the association between the companies "left hand down the right hand," signing a false sale. ABC with the largest amount, for example, March 20, 2012, Mr. Kwak behalf of Venture Motor Company, in the absence of real goods trade, the forgery of the company and the car company's Wing Chi purchase and sales contracts, as a Branch of the Agricultural Bank of China from Ben Thanh to apply for a 60 million yuan of acceptances, pay deposit 30 million yuan, 30 million yuan exposure amount, maturity date September 20, 2012.

Only separated by one day, March 21, 2012, Mr. Kwak again in the same means, in the Ben Thanh Branch acceptances handled 80 million yuan, 40 million yuan to pay the deposit, the amount of 40 million yuan exposure.

According to the reporter, which expires after exposure fails to repay the sum of acceptance by guarantee companies repaid. The exposure in front of 30 million yuan, guarantees compensation of 10 million yuan enterprises, ABC advance of 20 million yuan, the right of the car, etc. Hongchang litigation recovery. As of July 14, 2014, the bank has recovered 15.51 million yuan, and the other 12 received Venture Car trailer tanker, should not cause actual loss.

However, the actual control of the aforementioned Kwak seven companies, only the name will be able to see some clues, before "Hongchang up" and other famous companies or the same association. Strange that the bank actually did not find?

A bank credit department told 21st Century Business Herald reporter, said: "The situation of false trade defraud bankers' acceptances are common because many banks when issuing acceptances, only value corporate bond and guarantee qualification for the real trading background and practical. The loan uses the open eyes closed eyes. "

August 2012, Mr. Kwak, who due to funding strand breaks, unable to deliver payment of part of the funds exposure to the relevant bank. After Kwak and other indicted, Boxing County People's Court these seven companies and Kwak guilty of the crime of fraudulent promissory notes in 2013, which Kwak sentenced to four years and fined 100,000 yuan.

After the first trial, Mr. Kwak appealed, one of the reasons is that the financial institutions associated with the purchase and sale contract for both companies, the purchase and sale contract should be knowing whether it is true, he himself did not get bill acceptance by deception. August 7, 2014, Binzhou City Intermediate People's Court upheld the original verdict.

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