China has uncovered 94.4 billion yuan (US$15.2 billion) worth of loans backed by fake gold transactions, Bloomberg reported Friday.
The loans involved 25 bullion companies which made a combined profit of 900 million yuan, the report said, citing the National Audit Office website.
Authorities suspect potential fraud in commodities financing deals for gold, of which China is the world’s biggest producer and consumer.
Also, they are investigating alleged fraud at Qingdao Port, where copper and aluminum stockpiles may have been pledged multiple times as collateral for loans.
China’s tighter credit policy, which has resulted in higher borrowing costs in recent years, has created a surge in commodities financing deals.
Goldman Sachs Group Inc. estimates these deals to be worth as much as US$160 billion.
“This is the first official confirmation of what many people have suspected for a long time — that gold is widely used in Chinese commodity financing deals,” Liu Xu, a senior analyst at Capital Futures Co. in Beijing, said.
As much as 1,000 metric tons of gold may have been used in lending and leasing deals in China, where commodities including metals and agricultural products are used to get credit amid lending restrictions, according to World Gold Council estimates.
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