He also said he was unaware of Mr. Hale's unlawful loan.

Loans to Cover Up Loans Later, the prosecutors said, Mr. Watanabe indirectly approached a senior politician to persuade banks to lend him more than $1 billion to cover up the unlawful loans.

First came a report from China's National Audit Office, which found that $320 million of bank funds had been diverted from several branches of the bank through "unlawful loans, off-the-books business and the unlawful granting of letters of credit and issuing bank bills."