Case of Ong Moumou Illegally Issuing Financial Instruments

Keywords: Bank employee; crime of illegally issuing financial instruments; defense of not guilty

Handling Attorney: Yang Xingquan

Basic Facts of the Case: In October 2012, Zhao Moumou from the Anshan Branch of a certain bank developed a credit facility for a certain company at the Anshan Branch of that bank and personally handled the first-phase factoring transaction. In December 2012, Zhao Moumou was appointed as the deputy branch manager of the Zhanqian Sub-branch of the Anshan Branch of the same bank and took charge of its operations. In April 2013, when the first-phase factoring transaction matured and the certain company fulfilled its obligations on time, Zhang Mou from the certain company expressed to Zhao Moumou his intention to initiate a second-phase factoring transaction. Despite Cui Moumou from Dalian’s certain company explicitly stating that they did not consent to continuing cooperation with the certain company, Zhao Moumou, at Zhang Mou’s request, provided the certain company with two receipts—each bearing the official seal of Dalian’s certain company, dated 2012, and otherwise blank—that he had obtained during the handling of the first-phase factoring transaction. Zhao Moumou then instructed Wang Moumou to process the second-phase factoring transaction. When Wang Moumou pointed out that the receipts provided by Zhao Moumou bore signs of alteration, Zhao Moumou failed to truthfully disclose that he had privately provided blank receipts to the certain company and Zhang Mou. During the verification process conducted by Dalian’s certain company to determine whether to re-seal the receipts for Zhang Mou’s first-phase factoring transaction, Zhao Moumou assisted the certain company and Zhang Mou in deceiving Dalian’s certain company into affixing the official seal on the receipts. Furthermore, Zhao Moumou instructed Wang Moumou to continue processing the factoring transactions. Throughout the factoring transaction process, Wang Moumou was unaware that the certain company, Zhang Mou, and Zhao Moumou were defrauding the bank; nor had Wang Moumou conspired with them to obtain bank acceptance drafts fraudulently. After discovering the alterations on the receipts, Wang Moumou promptly reported the matter to Zhao Moumou and followed Zhao Moumou’s instructions in completing the issuance procedures for the factoring transactions. After the second-phase factoring transaction was completed, Zhang Mou discounted all the bank acceptance drafts and used the proceeds for the benefit of the certain company, retaining RMB 95 million after deducting the prepaid margin. On October 22 and 24, 2013, the repayment deadline for the second-phase factoring transaction arrived, but the certain company failed to repay the amount due. The Shenyang Intermediate People’s Court of Railway Transportation convicted Wang Moumou of the crime of illegally issuing financial instruments and sentenced him to three years’ imprisonment, with a five-year suspended sentence. Dissatisfied with the verdict, Wang Moumou retained our firm’s lawyers to mount a defense of innocence. Following review by the Liaoning Provincial Higher People’s Court, Wang Moumou was ultimately found not guilty.

Case Highlights:

In this case, the court adopted most of the defense counsel’s arguments and acquitted Mr. Wang.

As a bank employee, Mr. Wong was not the drawer of the bank acceptance bills but rather acted on behalf of the bank in his capacity as the acceptor, specifically performing the acceptance act for these bills. He followed the instructions of the head of his institution, the factoring business developer, and the person in charge, Mr. Zhao, in handling factoring business for Company X and Mr. Zhang. Prior to this, he was unaware of the deceptive practices employed by Company X, Mr. Zhang, and Mr. Zhao toward the bank. After discovering traces of alteration on the acknowledgment receipts, he promptly reported the matter to Mr. Zhao and, following Mr. Zhao’s instructions, continued to process the issuance procedures for the factoring bills. His actions were entirely within the scope of his official duties. Furthermore, the headquarters of the bank confirmed that his conduct did not constitute a violation. Therefore, Mr. Wong’s actions do not amount to the crime of illegally issuing financial instruments.

Mr. Wong was the developer and decision-maker of non-factoring business. When handling bank factoring business, he was solely responsible for completing the factoring procedures as instructed by the head of the institution. Given that he had already fulfilled his duty of care, the court cannot hold him liable simply because he was the person in charge of the business. Instead, the court should recognize that, as someone entrusted with the responsibility of standardizing business operations, preventing financial risks, and ensuring that all business activities comply with applicable laws, regulations, and risk-control provisions, he has committed the crime of illegally issuing financial instruments.

Typical significance:

The previous wrongful conviction in this case has had an extremely adverse social impact and led to misguided career orientations. Following this case, the morale of employees at the Anshan Branch has been significantly undermined; they are reluctant to take on similar tasks and avoid assuming responsibility, leaving business operations virtually at a standstill. Everyone is living in fear, and other staff members are equally apprehensive that one day they might be convicted on the same charges, thus daring not to handle any business. The defects in the bank’s own institutional design and the lack of clarity regarding internal job responsibilities cannot be attributed to the employees themselves. It is highly significant that the court has corrected these issues, thereby protecting the legitimate rights and interests of Mr. Wang and preventing potential damage to his reputation and obstacles to his personal development that could have resulted from his wrongful conviction. At the same time, this case also demonstrates judicial fairness and ensures that innocent individuals will not be subjected to criminal prosecution.