Chinese Bank Heist by Executives: $358 Million in Client Savings Misused for Shareholder Luxury

Chinese Bank Heist by Executives: $358 Million in Client Savings Misused for Shareholder Luxury

Sofia Delgado-Cheng
2 min read

Chinese Bank Heist by Executives: $358 Million in Client Savings Misused for Shareholder Luxury

In a shocking revelation, the head of a local bank in China, Huludao Bank, alongside a major shareholder, misused client savings worth $358 million (26 billion yuan) for personal gains. This misuse of funds has come to light following a criminal judgment by the Shanghai Baoshan District People's Court.

In August 2020, just a month after their appointment, Huludao Bank’s new chairman, Li Yulin, and acting president, Li Xiaodong, colluded with the bank's largest shareholder, Duan Hongtao, and others to misappropriate 26 billion yuan from the bank. The funds were diverted under the pretext of resolving bad assets. Notably, 18 billion yuan was transferred to Hong Kong to a company account controlled by Duan.

The scandal surfaced as part of a broader investigation into the bank's financial dealings. Huludao Bank, originally established as Huludao City Commercial Bank in 2001 and renamed in 2009, saw a dramatic decline in its financial health around this period. By 2020, the bank's operating income plummeted by nearly 61% compared to the previous year, resulting in a loss of 278 million yuan. The bank's non-performing loan ratio skyrocketed to 13.8%, well above the industry threshold, with a provisioning coverage ratio of only 32.39%.

Key Takeaways

  • Misuse of Funds: Top executives at Huludao Bank misappropriated $358 million (26 billion yuan) within a month of their appointment.
  • Major Transfers: Out of the misappropriated funds, 18 billion yuan was converted into foreign currency and transferred to Hong Kong.
  • Financial Decline: The bank's financial stability was severely compromised, with significant losses and a high non-performing loan ratio.
  • Legal Consequences: Key individuals involved, including major shareholder Duan Hongtao, were implicated in this financial scandal.


The scandal at Huludao Bank highlights several critical issues within the bank's management and regulatory oversight. The rapid misappropriation of such a vast sum points to systemic weaknesses in internal controls and corporate governance. The involvement of high-ranking executives and major shareholders underscores a culture of impunity and reckless disregard for fiduciary responsibilities.

The court documents reveal that the misappropriation was disguised as a plan to manage bad assets through a fictitious asset management scheme. This ruse facilitated the diversion of funds to Duan Hongtao, who extravagantly spent the misappropriated money. The plan also involved complex financial maneuvers, including the illegal conversion of funds into foreign currency and their transfer to offshore accounts.

Huludao Bank's deteriorating financial condition, evidenced by a dramatic drop in income and a spike in non-performing loans, reflects the impact of such fraudulent activities. The bank's failure to publish annual reports for three consecutive years further obscured its true financial state from regulators and the public.

Did You Know?

  • High-Speed Misappropriation: The 26 billion yuan misappropriated from Huludao Bank was siphoned off within just one month of the new chairman and president taking office.
  • Declining Financial Health: By the end of 2020, Huludao Bank's assets had decreased to 99.64 billion yuan from a high of 108.7 billion yuan in 2019.
  • Poor Governance: Among Huludao Bank's top ten shareholders, seven have been listed as defaulters, indicating widespread governance issues.
  • Legal Ramifications: One of the participants, Chen Mou, was convicted of money laundering for converting the stolen funds into cryptocurrency and transferring them abroad.

This scandal serves as a cautionary tale about the critical importance of robust corporate governance, transparency, and regulatory oversight in the banking sector to protect clients' savings and ensure the integrity of financial institutions.

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