Since 2008, Standard Chartered Bank has been receiving complaints from clients in China because of a loss in its overseas wealth management services which was reportedly caused by a bribery scandal involving one of its employees.
According to China's Economic Observer Newspaper, SCB, which allegedly has launched the highest number of "qualified domestic institutional investors products" in mainland China, has been the subject of clients' complaints about losses in the QDII products. Fan Xiaofeng, the assistant vice president of the Wealth Management Department of the Personal Banking Service of SCB (China) Shanghai Branch, was reportedly placed under investigation by the company in April and May 2009 on suspicion of promoting the wrong products and accepting bribes from Merrill Lynch Bank.
The report states when SCB investigated Fan due to a stock structure financial product he produced in cooperation with Merrill Lynch Bank, and MLB was also conducting an internal investigation of Zhang Xiaosong, one of its managers responsible for this product.
Fan, a Shanghai native born in 1980, is said to have been working as a personal financial consultant when he first joined SCB and was later promoted to the post of principal of the bank's structural product team. According to an insider quoted in teh reports, though Fan was not in a senior position, he had lots of power and had a major say in the design, bidding, and purchase of overseas wealth management products.
Currently the exact amount of bribes accepted by Fan are not known, but it is estimated to be around CNY800,000. Rumors are that Fan has four residential properties in Shanghai and, after his promotion, he was often taken to local high-end entertainment venues in a special car whenever he traveled to Hong Kong or Hangzhou.
According to the Chinese media reports, SCB has responded that it has done nothing wrong so it does not take any responsibility for compensating the clients.
