Dual Controls

Xu Chaofan was sentenced to to 25 years in prison. Xu Guojun was sentenced to 22 years. They were convicted of racketeering, money laundering and visa fraud. Their wives were charged with passport fraud and with helping their husbands launder money. Their wives were sentenced to eight-year prison terms.

It started as far back as 1991. Xu Chaofan became vice president of a branch of the Bank of China. These bank managers were allowed to approve loans and asset transfers with a single signature. There was no requirement for dual control. In all, the bank lost $482 million as the men went to Las Vegas and Macau where they bet millions at the baccarat tables and spent as much as $4,000 a night on meals.

In 2001 auditors detected an accounting problem. As the theft began to unravel the men went to Plan B. They had false identification papers, married Americans and began naturalization proceedings to stay in the U.S. The two men have been in the North Las Vegas detention facility for five years already as the international case required extensive diplomatic coordination and translations in Mandarin and Cantonese, as well as the cooperation of investigators in Hong Kong, China and the U.S. Lanny A. Breuer, chief of the Justice Department's criminal division, said "We will not allow foreign nationals to abuse their countries' financial systems and then sneak into the United States to live richly off their ill-gotten gains."

Much of this prosecution was made possible because a third perpetrator who was also a bank manager, Yu Zhendong, agreed to plead guilty and assist in the investigation. He was living in Los Angeles but has since been returned to China. He is serving a prison sentence there.

This case exemplifies why dual controls are necessary and that when a problem is hidden and allowed to continue, it only grows in size.