The former head of a major Chinese policy bank has been officially arrested for “suspected serious violations of discipline” according to official government statements late last week.
Hu Huaibang, who had served as chairman of China Development Bank from 2013 through September of 2018, is suspected of having taken bribes and has been charged by the Supreme People’s Procuratorate, China’s highest level law enforcement agency.
The former China Development Bank chief had retired in 2018 before being accused shortly thereafter of having abused his position to arrange loans for CEFC China Energy. Hu is also said to have leveraged his power within the state-owned bank to direct loans to HNA, which continues to sell off assets in a struggle to repay its debts.
Bank Boss Enters Final Stage of Discipline Process
Hu’s arrest comes after the senior cadre, who had also served as China Development Bank’s top party official, had been expelled from the CCP last month for violating party discipline and legal statutes, with the National Supervisory Commission having transferred the case to the Procuratorate at that time.
The CCP’s Central Commission for Discipline Inspection found in January that Hu had “violated the eight-point code on party and government conduct, sought profits for others in personnel promotion by taking advantage of his posts, wantonly traded power for money, and connived with his relatives, allowing them to use his influence to seek personal gains.”
Along with the Agricultural Development Bank of China and the Export-Import Bank of China, the Development Bank is one of the central government’s three policy banks and is intended to fund key policy initiatives both domestically and overseas. The bank had total assets of RMB 16.18 trillion (then $2.35 trillion) at the end of 2018, according to its annual report.
Policy Bank Boss Linked to HNA, CEFC
Under Hu’s direction the Development Bank was a key underwriter of HNA’s debt-fuelled acquisition program that as of mid-2018 left the conglomerate with financial liabilities estimated at $100 billion.
In the past two years, HNA has hurried to sell off assets in a dash to meet financial commitments, including selling an office building in London last November for 24 percent less than it had paid to acquire the property in 2016.
During January, HNA, which is controlled by “Buddhist billionaire” Chen Feng, is said to have sold a Shanghai office project to China Cinda Asset Management for an undisclosed sum after disposing of a set of US golf courses in November, with that disposal also taking place at 24 percent less than HNA had paid to acquire the assets in 2016.
In addition to its relationship with HNA, under Hu’s direction China Development Bank is said to have been a major lender to CEFC China Energy, whose founder and chairman Ye Jianming was said to be detained for corruption in 2018, and has not been seen since.