SHANGHAI - Three Chinese bankers arrested in May had accepted bribes in exchange for arranging a secret loan to a real estate developer in dire need of cash, a local newspaper reported.
The case highlights difficulties facing small companies as the government strives to tighten credit flows and wean the economy from its reliance on debt-fuelled investment.
Authorities have stepped up efforts in recent months to curtail lending channelled through the burgeoning shadow banking system, which involves a variety of non-bank lenders. Much of this activity involves banks using third-party institutions to shift loans off-balance-sheet and evade lending restrictions.
The bankers allegedly funnelled money to the developer via a local micro-lending company, 21st Century reported in an article published on its website on Thursday.
In an article in its print edition on Friday, 21st Century Business Herald said the suspects were branch presidents at three mid-sized banks in Wujiang, a wealthy district in Suzhou known for its vibrant private economy and active underground lending networks. It cited an unnamed source from one of the banks, and two of the banks confirmed to the newspaper that the executives had left.
Authorities in Suzhou city, 100 km (60 miles) east of Shanghai, arrested three executives from commercial banks in May for "accepting especially large bribes", official Suzhou TV quoted the Suzhou prosecutor's office as saying at a press event late last month. At the time it wasn't clear what the bribes were for.
Due to poor real estate market conditions earlier in the year and an inability to roll over other loans, the developer was in severe need of cash, 21st Century also reported on Thursday.
That report also quoted bank sources saying that tighter liquidity conditions in recent months and regulatory pressure on banks to de-leverage had contributed to an increase in illegal lending.
The developer arranged an overseas trip involving many bankers to facilitate payment of the bribes. Investigators have focused on three who are suspected of accepting large bribes, though other bankers may have also accepted more modest gifts, 21st Century reported.