Auditor-General Li Jinhua reported to the Standing Committee of the 10th National People's Congress (NPC), on June 23 that 1.4 billion yuan (US$170 million) of the 2003 budget had been misused or wrongfully appropriated by 41 of 55 government offices under investigation.

The General Administration of Sports was reported to have appropriated 131 million yuan (US$15.8 million) for the Beijing Olympic organizing committee since 1999. About 109 million yuan (US$13.2 million) of the money was used to erect apartment buildings for employees and the rest was invested into companies, according to the audit report.

The overseas edition of People's Daily has been flooded with readers' letters and phone calls inquiring about this issue. On Tuesday, the paper published the following interview with an unidentified official.

"We thank the State Auditing Office for its careful work and our people for their responsible checking, which show their care and warning," said a source with the administration. "We will endeavor to take related reforming measures."

Despite the admission of a need for reform, the General Administration of Sports said that media reports that it embezzled or misused funds are inconsistent with the result of the audit.

People's Daily: The media have reported that the administration used the special fund for the Beijing Organizing Committee for the Games of the XXIX Olympiad ( BOCOG). Are those reports true?

General Administration of Sports: They are not true. BOCOG and the Chinese Olympic Committee (COC) have taken up the matter with the media. The media made corrections on June 25.

Some media don't know the facts and they even reported we misused and embezzled the funds, which sparked a chain reaction in the domestic and overseas media. More and more reports that we misused or even embezzled the funds appeared. In order to prevent a negative impact on our preparations for and participation in the Athens Olympic Games and preparations for the 2008 Olympic Games, we felt it imperative to provide a clear response.

PD: Foreign readers have also asked whether public donations were embezzled.

GAS: No, this is misunderstanding or rumor. I will first clarify the difference between public donations and income from corporate sponsors.

COC's income from corporate sponsors is commercial income earned from marketing. Public donations do not have any commercial purpose. COC is not in charge of public donations. The General Administration of Sports considers public donations very important. All public donations are under strict administration of China National Sports Foundation, a subordinate organization of the administration. Therefore, neither the General Administration of Sports nor COC embezzled public donations. 

PD: Did the General Administration of Sports embezzle funds intended for building sports facilities or for athlete training and competition?

GAS: No, this is impossible. The Ministry of Finance directly appropriated money to the General Administration of Sports for building sports facilities and athlete training and competition. The money, including lottery income, is under strict administration of various departments of the administration and has never been embezzled.

The money in COC's account is not appropriated from the government. Most of it is income from marketing done by COC itself and market development assistance funds from the International Olympic Committee (IOC). Some funds in COC's account come from international organizations, for holding conferences and carrying out activities. These funds are used according to regulations and the international organizations' requirements and have never been embezzled.

PD: Can the General Administration of Sports, a government department, use funds of the Chinese Olympic Committee, which is only an association?

GAS: As everyone well knows, China's sports administration system is unique. The Chinese Olympic Committee is not an independent entity. There are no full-time employees, not even any staff. The leadership of the General Administration of Sports and the Chinese Olympic Committee are the same. The problem appears because of such a unique administration system. Relevant system adjustment will be needed in the future.

PD: Why was the fund used to build houses for employees of General Administration of Sports and why did the General Administration of Sports subsidize them?

GAS: We did use money that was accumulated by COC's marketing activities to complement the self-financed housing construction. It amounted to 109 million yuan (US$13.2 million), about one-third of the total. The residents are mainly senior athletes, coaches and sports workers who previously contributed to China's sports and Olympic games. They also include coaches, sports researchers and officials of different associations who are winning honors for the homeland, and employees of both the General Administration of Sports and COC.

In the past, COC never gave salaries or subsidies to administration employees, even though they did work for the committee. Since 2002, some money earned from Olympic marketing has been used for subsidies. The reason is that the workload increased after China succeeded in its bid for the 2008 Olympic Games. The subsidy will be cancelled after the 2008 Beijing Olympic Games.

(China.org.cn July 7, 2004)