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CHINA: BNP executive ‘bribed official’

by Richard McGregor in Beijing and Sundeep Tucker in Hong KongFinancial Times
May 29th, 2007

An executive in the Shanghai office of BNP Paribas bribed a senior government official in the capital in order to win business underwriting Chinese sovereign bonds, according to the Beijing city prosecutor’s office.

Liu Min, then the head of the French bank’s fixed income department, allegedly paid $128,000 to Xu Fangming, a Ministry of Finance official, in the late 1990s to ensure he did not object to BNP's underwriting mandate.

An account of the bribery, seen by the Financial Times, is contained in a report of recent anti-corruption cases circulated internally by the Beijing City People’s Procuratorate.

Mr Xu, a division head in the prestigious and powerful ministry, has already been found guilty of accepting bribes totalling $264,000 and was sentenced last year to life imprisonment. The sentence was cut to 13 years on appeal.

Previous reports about his case, which did not name Ms Liu or the French bank, said he had taken the bribes in 1997.

The prosecutor’s office said Mr Xu had solicited bribes by “hinting” to Ms Liu that “Chinese public servants were too badly paid to afford housing and cars”.

After being asked by Ms Liu what would be an appropriate sum of money to pay, she sent $128,000 to a bank account operated by a long-time friend of Mr Xu’s in Hong Kong. “In return, Xu simply gave a ‘yes’ vote [to the BNP-Paribas deal]”, the report said.

Mr Xu was a highly regarded official and well known in foreign banking circles. Ms Liu, who has a French passport, was later promoted at BNP-Paribas but is understood to have left the bank at the end of 2006 following a ten-year career.

In a statement BNP Paribas said: “We have a zero tolerance policy towards any unethical practices and would never use bribes to obtain business. We would of course be happy to co-operate fully with any official investigation should one arise.” It declined further comment.

In theory, Ms Liu could face bribery charges.

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