China Nabs 234 Suspects In Henan, Anhui Banking Scam

Chinese authorities have arrested 234 people linked to a banking scandal that triggered mass protests and violence earlier this year, with thousands of depositors demanding payment in Henan and Anhui provinces and police doing nothing as hooligans attacked protesters.

Photo Insert: Mass protests of depositors outside the People's Bank of China demanding repayment

One of China's biggest-ever banking scandals unfolded as people were swindled out of their savings after being lured with the false promise of high interest rates on deposits in six rural banks in central China's Henan and neighboring Anhui, the Associated Press (AP) reported.

According to authorities, the alleged mastermind, Lu Yiwei, and his associates in some cases offered interest rates as high as 18% annually.

Following regulator crackdown, four banks in Henan province suspended cash withdrawals in April, freezing thousands of customers from accessing funds in their accounts. These led to protests that, at times, ended in violence.

Police said Monday along with the arrests "significant progress" was being made in recovering stolen funds.

"At present, the public security organs have apprehended a large number of criminal suspects, among whom 234 were arrested," the Xuchang city government told Agence France-Presse (AFP).

The scale of the fraud caused a massive dent in public confidence in China's financial system, analysts said. Authorities scrambling to contain the damage from the scandal announced that depositors will be repaid.

The repayments started in mid-April. While smaller deposits were paid first, on Monday, the Henan banking and insurance regulator promised to repay those who had deposited between 400,000 and 500,000 yuan (€57,909 to €72,311) starting this week, Deutsche Welle reported.

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