Rule of Law

Audit finds widespread irregularities

Shanghai Daily

February 12, 2007

Government auditors have discovered 280 billion yuan (US$36 billion) in accounting “irregularities” in companies and government departments across the country. The problems were found after checking the books of more than 137,000 organizations last year, the National Audit Office said on its Website yesterday, quoting a speech by chief Li Jinhua.

The crackdown allowed the state to save 49 billion yuan through cost reductions and capital reclamation. The National Audit Office alone checked 425 firms and agencies, uncovering 64.4 billion yuan in irregularities. It sent 149 cases to police for prosecution, Li said.

“The office will strengthen auditing functions to supervise entities, crack down on economic crimes and prevent losses,” he said.

Li’s comments came during an annual gathering at the Beijing branch of the top audit authority. Details on the type of problems discovered were not disclosed. Additional information on cases at the central government level are expected in March or April, when the audit authority normally posts its annual report on state organs.

In one major case disclosed in January, local governments were found to have misappropriated at least 272 million yuan worth of funds earmarked for people relocated from the area around the Three Gorges hydroelectric project. The money was used to open government-run businesses, settle local agency debts, pay staff salaries and construct office buildings and houses for people not entitled to coverage under the resettlement program, the auditors found.

Li gained nationwide fame for the outspoken nature of his reports. The state-level irregularities have been called an “audit storm.” China last year reclaimed 4.16 billion yuan in embezzled funds and arrested 76 people after an investigation into how state capital was used in 2004. Due to Li’s reports, 760 officials have been charged with crimes or received administrative punishments.

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