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China's insurance regulator suspected of graft

April 9, 2017

The country's anti-corruption watchdog is investigating allegations of market manipulation within the industry. The probe is part of a wider crackdown on corruption ordered by President Xi Jinping.

Symbolbild Polizei China
Image: Getty Images

China's anti-corruption watchdog has begun an investigation into the director of its top insurance regulatory body in a move that could prove problematic for some of China's most powerful firms.

The authorities are investigating Xiang Junbo for "suspected serious violation of the Party's code of conduct," the Central Commission for Discipline Inspection said in a brief statement on its website on Sunday.

The phrase is often used as a euphemism for corruption.

Xiang Junbo
Xiang Junbo faces corruption probeImage: Reuters/J. Lee

Xiang became head of the China Insurance Regulatory Commission in 2011 after leading one of the country's largest state banks, the Agricultural Bank of China.

Several Chinese regulatory agencies have begun to focus on the insurance industry, complaining about companies' use of their financial holdings to fund high-risk acquisitions in real estate and unlisted equities.

In February, Beijing launched investigations into several major insurance companies, including Evergrande Life and Foresea Life, for alleged market manipulation.

Insurance industry accused

At the time, the chairman of the China Securities Regulatory Commission singled out the insurance industry as a home for "barbarians" and "thieves" who engaged in debt-fueled stock market acquisitions, he alleged.

The president of China's first non-life insurance company, PICC, is also facing a corruption probe.

Rumors about Xiang being the target of a corruption investigation have been swirling for months.

In 2014, Xiang was tied to another scandal when the New York Times reported he approached JP Morgan executives concerning employment for the child of a well-connected friend.

Last November the company agreed to pay a $264 million (249 million euro) fine to the US government to settle claims it had violated the Foreign Corrupt Practices Act by handing out jobs to the friends and family of top Chinese officials under similar circumstances in exchange for preferential treatment.

Corruption probe

The latest investigations are part of Chinese President Xi Jinping's campaign against official corruption that is affecting once-untouchable party, military and business leaders and rolling back their powerful networks of relatives and friends.

However, some critics accuse Xi of using corruption allegations to maintain his own grip on power.

bik/jm (AFP, Reuters)