CBIRC publicly criticises Kingold for Lackadaisical Risk Controls

The China Banking and Insurance Regulatory Commission (CBIRC) has publicly condemned Kingold Jewelry following the revelation of its USD2.9 billion loan fraud.

Kingold was revealed to have collateralised gold, that turned out to be gilded copper, against loans obtained from a minimum of 14 financial institutions, as reported by Finews Asia.

The CBIRC said in a statement: “A number of banking, insurance and trust institutions were involved in the Wuhan Kingold Jewelry fake gold incident, which was gradually disclosed starting in January 2020.”

“Other than the problems associated with the company itself, the incident also revealed that the internal controls and risk management of some financial institutions were empty shells,” the statement continued.

The allegations of the fraud, which would constitute as one of the largest cases of gold loan fraud seen by China, were initially denied by Kingold Jewelry.

China has witnessed a number of ‘Ghost Collateral’ scandals, including once such scandal which saw a pile of steel pledged as collateral against a USD3 million loan reportedly vanish from a warehouse.