When Chinese property developer Agile Property Holdings Ltd. said this month that its chairman had been taken into custody by authorities, the disclosure was a shock to Western banks that had lent the company money.

[ . . .]

The spate of suspected fraud cases and growing fears that loans won’t be repaid has raised questions about the effectiveness of scrutiny applied by banks to borrowers.

via Troubles in China Rattle Western Banks – Wall Street Journal 

Do I have much sympathy for Western banks who, with dollar signs in their eyes, lend to Chinese borrowers and end up losing their shirts? No, I do not.

Sure, it’s possible that some of these lenders have done their homework and yet have still been burned by fraudsters. I feel for those guys.

The others? The ones that fail to do sufficient due diligence or, even worse, the ones who uncover red flags and plow ahead anyway because of anticipated profits? Uh uh. You took the risk, now you have to deal with the downside.

It goes without saying that any lender out there whose reaction to the latest corruption scandal is shock and surprise is either unconscionably ignorant or a liar.

But hey, there’s a sucker born every minute, and for some reason a large number of ‘em naturally find their way to China.

© Stan for China Hearsay, 2014. |
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