The Agricultural Bank of China, one of the country's largest lenders, allegedly granted 26.6 billion (US$ 26, 660 million) in loans against banking laws and regulations in 2004 according to the China Audit Bureau in an audit circular on its website, reports chinanews.com on June 26.

"Business crime is still rampant inside the bank, which has seen 51 criminal incidents, with 8.86 billion yuan and 157 personnel involved," the circular says, adding that "the loans were for sedan purchases, real estate and poverty relief, " says the circular.

Banking reform is on the Chinese government's agenda after its entry into the WTO in 2001, which enabled the country's state-owned banks to compete with overseas banks.

"The bank has some problems with operation management and crisis control. It needs to better improve its business, " says the circular.

The result came after China's auditing body released its audit result on the bank's assets for 2004.

"The bank absorbed 14. 2 billion yuan (US$1,420 million) against its regulations and at some branches customer's deposits were even used for other purposes," says the circular.

"It is not only people outside the bank who are involved but also insiders."

Education loans were also placed on the blacklist after the audit found some payback rates were dependent on the schools' or students' economic status.

The circular also states that 75 million yuan (US$94 million) has been lost after a staff member in a Sichuan branch embezzled 118 million yuan (US$15 million) for purchasing shares.

The audit also found 1.267 billion yuan (US$1, 250 million) was illegally used, of which 1. 182 billion yuan (US$1,182 million) was miscalculated and 849 million yuan (US$109 million) was embezzled by the bank."

Fraud, money laundering and embezzlement have made headlines in China recently.

About 1,697 staff members of financial organizations have been seized for bank crime in the first half of 2005, according to previous state media reports.