Beijing's top banking regulators published Monday new rules dangling generous rewards to bank workers who expose corruption, in an apparent bid to check rising cases of bank fraud.

Bank managers will also be rotated to different posts and monitored for involvement in pornography, gambling and drugs, said the new rules which were released by the China Banking Regulatory Commission.

"Other measures announced included making senior managers "legally accountable" for major fraud cases, establishing a system of reporting on the stock investments of managers and top personnel, and establishing new checks on loan approvals.

"There's been a succession of major cases due to weaknesses in risk management and internal controls, and this had led to major capital losses from banks," a commission official said.

The new codes appear to be an effort to regain confidence in state-owned commercial banks after a string of scandals have tarnished original plans to issue stock.

Late last year, the Bank of China disclosed that employees in one branch in Beijing alone had stolen 30 million yuan ($3.6 million); in February, the China Construction Bank revealed that employees in northeastern China had embezzled 33 million yuan; and a few days ago, the Agricultural Bank of China said that 43 employees in Baotou, in northern China, were under investigation after the disappearance of 115 million yuan.

On Sunday, the Bank of China announced that an employee in the northeastern city of Dalian had been arrested after embezzling 50 million yuan to gamble on soccer matches.

Last week, it was disclosed that Zhang Enzhao, who resigned this month as president of the China Construction Bank, was being sued in a United States court over allegations that he took bribes from an American contractor.

"The cases show the auditors are getting serious and going through the banks'books," said Stephen Green, a senior economist with Standard Chartered Bank in Shanghai. "But you'd have to be a fool to believe that Chinese banks are already out of the woods."

The government is pressing banks to prepare for the arrival of international banks in 2007, when World Trade Organization rules require China to lift many restrictions on the entry of foreign banks.

Source: China Daily