Bank fraud may hit repayment of US$75m deposits

China National Heavy Duty Truck Group Jinan Truck Co Ltd, a Chinese maker of heavy-duty vehicles in Shandong Province, said one of its units is allegedly involved in a bank fraud that could threaten repayment of 500 million yuan (US$75 million) worth of deposits.

CNHTC Jinan Truck didn't name the bank, but Securities Times and Caijing Magazine reported that the company was a victim of an alleged loan fraud and forgery of commercial paper at Jinan-based Bank of Qilu.

Apart from the 500 million-yuan deposit at the bank CNHTC Jinan Axle and Transmission has no other business connection with the bank, and business operations would not be affected, CNHTC Jinan Truck said in a filing to the Shenzhen Stock Exchange.

The 500 million yuan accounted for 2.5 percent of the company's total assets and 2.2 percent of the company's revenue in the first three quarters in 2010. Profit of the truck maker in the first nine months last year stood at 700 million yuan.

The firm reported to the police after finding some unusual documents and receipts during an internal audit of its financial status.

Police in the province have launched a probe into the bank's loan fraud. Formerly known as Ji'nan City Commercial Bank, it is partly owned by Commonwealth Bank of Australia.

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