Chinese police arrest more than 200 people after banking scandal

Chinese police have arrested more than 200 people in connection with one of the country’s biggest banking scandals, which sparked rare and widespread protests.

In April, after accusing regulatory authorities of mismanagement, four banks in the central province of Henan suspended cash withdrawals and froze the funds of hundreds of thousands of customers, sparking protests that sometimes turned violent.

On Monday, police said they had arrested 234 people in connection with the scandal and were making “significant progress” in recovering the stolen money.

“A criminal group… has illegally taken control of four municipal banks… and is suspected of having committed a series of serious crimes,” Xuchang City Police said in a statement on Monday.

China’s rural banking sector has been hit hard by the financial measures taken by Beijing to contain the housing crisis and the sector’s rising debt, which has had repercussions on the national economy.

The organizers have been gradually offering refunds to customers since mid-April.

On Monday, the Henan Banking and Insurance Regulatory Authority promised to return the money starting this week to everyone with a deposit of 400,000 to 500,000 yuan ($57,900 to $72,300).

Customers with small amounts have already received their money.

Analysts said the scale of the fraud, apparently proven more than a decade ago, dealt an unprecedented blow to public confidence in the Chinese financial system.

Police ended a large protest by affected customers on July 10 in the provincial capital, Zhengzhou, beating protesters and forcing them to board buses, according to witness accounts heard by AFP and verified footage on social media.