SHANGHAI, June 26 Chinese gold processing firms
have since 2012 used falsified gold transactions to borrow 94.4
billion yuan ($15.2 billion) from banks, the country's chief
Commodities such as copper, rubber, soybeans and bullion
have commonly been used in China for financing, where traders or
investors borrow against the commodity with the aim of investing
the money in high-return areas such as real estate or shadow
Most such deals are legitimate, but revelations of borrowing
based on fake transactions in the gold market by the national
auditor, which comes on the heels of alleged metals financing
fraud at Qingdao Port, may prompt authorities to launch another
crackdown on commodity financing.
Spot checks on 25 companies that process bullion, such as
jewellers, showed they made a combined profit of more than 900
million yuan by using the bank loans to take advantage of the
difference between onshore and offshore interest rates, as well
the appreciation of the Chinese currency, according to a report
published this week on the National Audit Office's website.
Chinese firms could have locked up as much as 1,000 tonnes
of gold in financing deals by the end of 2013, the World Gold
Council said in April, indicating a big slice of imports has
been used to raise funds due to tight credit conditions, rather
than to meet consumer demand.
At current prices, that would be worth about $42 billion.
The audit report covered a period beginning in 2012 and did
not specify an end date. It did not identify any companies or
The audit office also said it found problems with the
country's coal, corn and cotton reserves.
A spot check of 12 emergency coal reserve sites found that
average monthly stocks were about 30 percent lower than the
target volume in 2011, and 18 percent lower than stipulated in
2012, the report said.
The quality of these reserves was also a problem.
Some 2.43 million tonnes of cotton stocks, accounting for 27
percent of the country's total reserves, were kept in open
storage as of June 2013, while some 70 percent of corn imported
by China Grain Reserves Corp (Sinograin) contained impurities
exceeding the stipulated 3 percent, the report said.
A reserve official at Sinograin, responsible for purchasing
and storing grain to ensure food security, was sentenced to life
in prison last year for taking 14 million yuan in bribes.
Some 110 Sinograin employees were also investigated for
taking bribes from grain retailers in exchange for awarding
storage contracts, according to reports last year by state
Beijing's anti-corruption campaign, which had focused on
energy giant PetroChina earlier this year, has begun to turn to
the commodities and mining sector.
($1 = 6.2090 Chinese Yuan Renminbi)
(Reporting by Fayen Wong)