A customs official at the Qingdao port that’s under investigation for commodity financing fraud was found dead last week from “unnatural causes.”
Qingdao Customs Deputy Commissioner Bian Peiquan died on August 5, according to state media Xinhua.
The police are investigating his death and haven’t commented.
Foreign and local banks in China are inspecting loans linked to metals supposedly warehoused in Qingdao, where traders use commodities from iron ore to rubber to secure loans.
A police investigation is focused on Decheng Mining to determine if it used the same batches of copper and aluminium stockpiled at Qingdao Port as collateral to secure multiple separate loans.
An estimated 14.8 billion yuan ($238 million) was loaned to Chen Jihong, Decheng Mining’s owner and his other companies by the Bank of China Ltd., Export-Import Bank of China, China Minsheng Banking Corp. and 15 other Chinese banks.
It is common practice for Chinese companies to use commodities as collateral to borrow money in foreign currencies. Commodities used include iron ore, copper, rubber and grain, corn and soy beans.
Standard Chartered said it has $250 million worth of commodity-related exposure at the Qingdao Port.
HSBC and StanChart have filed a series of lawsuits over their estimated $900 million exposure.
Bian, 59, hasn’t been linked directly to the scandal.
He was in charge of the operations at the service center and staff training, according to the official customs website, Reuters said.
“A source that knows Bian directly said his administrative role in customs would give him limited exposure to the port’s business activities,” according to Reuters.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.