Bank's Seven-Year Legal Battle to Recover Payouts from Employee Fidelity Insurance

After the incident involving Lü Yunze, China Citic Bank Corporation Limited first used its own funds to cover the client's shortfall, then turned to the insurance company with the policy. Unexpectedly, this claim process dragged on for seven years.

On May 8, the Supreme People's Procuratorate's official WeChat account "Tonight at 9:30" published an article titled "After a Seven-Year Tug-of-War, the Bank Finally Receives Over 3.28 Million Yuan in 'Employee Fidelity Insurance' Compensation." It detailed the曲折 journey of a "certain bank's Lanzhou branch" (whose name was withheld) that, after an employee defrauded clients of large sums, first fully reimbursed the clients, then sought compensation from the insurer using the policy, only to be repeatedly denied. Justice was ultimately served only after procuratorial authorities lodged a protest.

Lanzhou: The Full Story of the Lü Yunze Fraud Case Following the Supreme Procuratorate's notice, publicly available judicial documents soon revealed the identity of the "certain bank's Lanzhou branch."

In April 2023, an article on the official website of the Lanzhou Railway Transport Intermediate Court mentioned that the court accepted in February of the same year a property insurance contract dispute case between China Citic Bank Corporation Limited Lanzhou Branch and a certain insurance company, with the involved employee being "Lü."

Subsequently, the publication of related criminal judgment documents provided the final, crucial piece of the puzzle. According to the first-instance criminal judgment (2019) Gan 0102 Chu 1288 and the subsequent second-instance ruling issued by the Lanzhou Chengguan District People's Court, the mastermind behind this major case was precisely Lü Yunze, a client manager at the Dingsilu Sub-branch of China Citic Bank Corporation Limited Lanzhou Branch.

The "14 victimized clients" and the fraud amount of "over 3.93 million yuan" mentioned in the notice also perfectly matched the charges in the indictment.

Judicial documents show that Lü Yunze was born in 1988 and holds a bachelor's degree.

Between September 2018 and April 2019, he specifically targeted elderly clients with poor eyesight and unfamiliarity with electronic banking operations. Under the pretext of "helping with operations," he tricked clients into entering their passwords, transferring a total of 3.937 million yuan in wealth management funds from 14 victims into personal accounts he actually controlled. The funds were used to repay high-interest loans, speculate in stocks, and for personal extravagance.

In May 2019, China Citic Bank Corporation Limited Lanzhou Branch's internal audit discovered abnormal fund flows from multiple elderly clients to the same private account. On June 12, the bank fired Lü Yunze and reported the case to the authorities. He was criminally detained two days later.

After the incident, Lü Yunze only reimbursed 75,000 yuan. To protect its reputation and uphold the fundamental responsibility of a financial institution, China Citic Bank Corporation Limited Lanzhou Branch used its own funds to fully cover the remaining 3.862 million yuan.

However, when the bank applied for compensation in October 2021 based on the "Employee Fidelity Guarantee Insurance" purchased before the incident, the insurance company outright denied the claim.

The core reason for denial was: the bank's proactive reimbursement to clients did not constitute property loss directly caused by Lü Yunze's actions under the law; there was a lack of direct causation. Furthermore, the criminal case was not yet concluded, so the conditions for compensation were not met.

Subsequently, the case descended into a prolonged tug-of-war. On the criminal side, Lü Yunze's trial was fraught with twists and turns: in December 2020, the first-instance court sentenced him to 14 years in prison for fraud. After Lü appealed, the Lanzhou Intermediate Court revoked the original judgment in August 2021 on grounds of unclear facts and sent the case back for retrial. It wasn't until March 2024 that the court issued a final judgment, sentencing him to 11 years in prison.

Regarding civil compensation, China Citic Bank Corporation Limited filed a lawsuit with the Lanzhou Railway Transport Court in February 2022, losing the first instance. Its appeal in February 2023 and subsequent application for retrial to the Gansu Provincial High Court were also rejected, with the reasons consistently revolving around "the criminal judgment not being final and effective, and the dishonest act lacking confirmation by an effective legal document."

In January 2025, the bank applied to the procuratorial authorities for supervision. After reviewing the entire case file and verifying loss documentation, the Gansu Provincial People's Procuratorate pointed out a crucial issue: the core of the insurance contract is to compensate for losses. Civil compensation should not mechanically await the conclusion of criminal proceedings. The bank's advance payment of over 3.86 million yuan already constituted a substantive loss, and Lü Yunze's actions fully met the policy's definition of "dishonest acts."

After the procuratorate lodged a protest, the Gansu Provincial High Court adopted this view and amended the judgment in court on February 28, 2026.

On March 13, China Citic Bank Corporation Limited finally received over 3.28 million yuan in compensation, approximately 580,000 yuan less than the 3.862 million yuan it had advanced. This difference represents the deductible portion stipulated in the insurance contract.

Xiamen: The "Zeng Suzhu Case" from Twenty Years Ago In fact, disputes over employee fidelity insurance claims occurred twenty years ago, and the judgment at that time had already established clear rules for such cases.

Between 2005 and 2007, Xiamen City Commercial Bank (now Xiamen Bank) experienced the "Zeng Suzhu Misappropriation of Funds Case," which went through two trials ending with final judgments from the Xiamen Siming District Court and the Xiamen Intermediate Court.

Zeng Suzhu was a teller stationed by Xiamen Commercial Bank's Lianqian Sub-branch at the Fujian Provincial Highway Levy Bureau's Xiamen Wushipu Levy Station for on-site cash collection.

From June 2005 to September 2007, she exploited her access to highway levies, repeatedly using tactics like delayed deposits and using later misappropriations to cover earlier shortfalls, to lend the collected highway levy funds to relatives.

In just twenty days from August 30 to September 20, 2007, she misappropriated 1.8575 million yuan in nine separate transactions, ultimately resulting in 1.833 million yuan being unrecoverable. In June 2008, the court sentenced Zeng Suzhu to eight years in prison for misappropriation of funds.

Before the incident, Xiamen Commercial Bank had purchased employee fidelity insurance from China United Property Insurance Xiamen Central Sub-branch, with a limit of 2 million yuan per incident, a 500 yuan deductible, and a coverage period from May 1, 2007, to April 30, 2008.

Faced with a loss of over 1.83 million yuan, the bank applied for compensation in July 2008, only to receive a denial notice four months later.

The insurance company not only questioned the connection between the time of loss and the insured location but also focused heavily on the criminal charge: the insurance条款 listed only "embezzlement and job-related encroachment" as dishonest acts, whereas the court convicted Zeng Suzhu of "misappropriation of funds," thus claiming it fell outside the insurance coverage.

The courts at both levels in Xiamen did not accept this literal interpretation aimed at evading responsibility.

The court's judgment was definitive: employee fidelity insurance covers precisely the "dishonest acts" of employees. Although the policy mentioned embezzlement and encroachment, according to the authoritative interpretation by the China Insurance Society, illegal misappropriation also constitutes a typical dishonest act.

Zeng Suzhu's use of her position to misappropriate 1.833 million yuan of the unit's funds was, in essence, employee disloyalty and should be covered by the insurance.

Ultimately, the court confirmed the bank's right to subrogate the claim, strictly deducted the 500 yuan deductible from the actual loss, and ordered the insurance company to pay 1.832 million yuan in insurance benefits.

This judgment used precise figures to clarify the boundaries of compensation, and the underlying logic was simple—look at the substance, not the label. Viewed today, this aligns with the procuratorate's抗诉思路 in the recent case.

Dalian and Tangshan: Not Isolated Incidents The Lanzhou incident is not an isolated case. China Citic Bank Corporation Limited has also faced similar incidents in Dalian, Tangshan, and elsewhere, where internal control vulnerabilities and protracted insurance claim disputes are not uncommon.

In Dalian, between 2016 and 2020, an employee surnamed Li at China Citic Bank Corporation Limited's Dalian Branch took advantage of handling business to unauthorizedly activate mobile or online banking for clients, intercept U-shields, peek at passwords, cancel wealth management products without authorization, and process loans, causing net client losses of 10.846 million yuan.

After the incident, the Dalian office of the China Banking and Insurance Regulatory Commission issued a penalty, determining that the branch had "inadequate internal control implementation, failed to strictly enforce regulations prohibiting代客操作, and failed to promptly detect and investigate abnormal employee behavior."

This penalty subsequently became a key basis for the insurer, China Life Property & Casualty Insurance Dalian Branch, to deny the claim.

The insurance company invoked the clause exempting "losses caused by the insured's intentional acts or gross negligence," citing the bank's serious management loopholes as grounds to refuse payment of 8 million yuan.

After hearing the case, the Dalian Intermediate Court held that Li's criminal acts were highly concealed, and that his personal criminal acts violating the duty of honesty were the primary cause of the huge loss, which is precisely the core risk this insurance is meant to share. In comparison, the bank's inadequate internal controls constituted a minor factor in the overall cause and were insufficient to exempt the insurer from its liability. The court ultimately ordered full payment of the 8 million yuan.

The situation in Tangshan was even more shocking. Over seven and a half years, from February 2014 to September 2021, an employee surnamed Han at China Citic Bank Corporation Limited's Tangshan Xinhua Road Sub-branch falsely claimed to be purchasing wealth management products on behalf of clients. Without client authorization, he transferred funds from two major clients to external accounts to purchase off-bank wealth management products and engage in high-risk profit-seeking activities.

To cover the shortfall, he constantly "robbed Peter to pay Paul" between the two client accounts. Judicial auditing revealed that Han累计挪用 client Liu's deposits of 22.292 million yuan and client Chen's deposits of 14.185 million yuan, totaling 36.477 million yuan.

When the资金链断裂, 9.459 million yuan remained unrepaid. The court ultimately recovered only 88,000 yuan.

Faced with such a massive shortfall, China Citic Bank Corporation Limited Tangshan Branch advanced 6.076 million yuan and 4.48 million yuan to clients Liu and Chen in September and December 2021, respectively, paying 10.556 million yuan out of its own pocket.

Previously, China Citic Bank Corporation Limited Shijiazhuang Branch had continuously purchased employee fidelity guarantee insurance for six years, with a limit of 8 million yuan per incident and a deductible of 500,000 yuan or 15% of the loss amount.

However, when applying for compensation, the insurance company similarly denied the claim on grounds that "the loss does not fall within the scope of insurance coverage."

After prolonged litigation, the Shijiazhuang Intermediate Court issued a final judgment in May 2025, ordering the insurance company to pay within the 8 million yuan limit and bear related reasonable expenses, totaling 8.225 million yuan in compensation.

From Lanzhou to Dalian to Tangshan, these cases repeatedly grapple with the same issues: Does a bank's advance payment to cover client losses constitute a compensable loss under the insurance条款? Can minor differences in criminal charges become grounds for denial? After several rounds of litigation, the answer is clear—look at the substance, not the label. The courts use precise figures to delineate compensation boundaries, and procuratorial authorities use protests to bring cases back to the original intent of the contract. Ultimately, it boils down to one principle: insurance is for risk, and when a covered event occurs, it must be acknowledged. Banks certainly have room to improve internal controls, but the cost of employees' deliberate criminal acts should not be borne by clients, nor should it be swallowed solely by a bank that has already purchased insurance.