Almost 9.1 billion yuan (US$1.1 billion) was misused by 38 central government departments last financial year, China's Auditor-General Li Jinhua announced yesterday.
 
In his annual report to the Standing Committee of the National People's Congress, Li gave details of embezzlement and misuse of funds across departments and relating to hospitals, universities, water projects, highway construction and scientific research.

In one case, the lottery division of the national sports body overpaid two of its own companies by so much for printing and distributing lottery tickets in 2003 and 2004 that they turned profits of 558 million yuan (US$67 million).

Another instance of misappropriation of funds came from the Air Traffic Management Bureau of the General Administration of Civil Aviation which used 210 million yuan (US$25 million) of government money to circumvent national regulations and buy an office building in Beijing.

The purchase was made in 2003 in the name of a company the bureau owned. The bureau even paid annual rent of 13.5 million yuan (US$1.6 million) to its own company for use of the building.

The audit also found problems with university-fee collection, hospital charges, use of scientific research funds, construction of irrigation and water treatment works and rural highway renovation.

Central government departments such as the Ministry of Land and Resources and the National Tourism Administration were also found to have misappropriated funds.

And there were gross irregularities in the business operations of the four major asset-management companies, the report said.

The four companies - China Huarong Asset Management Corp, China Great Wall Asset Management Corp, China Orient Asset Management Corp and China Cinda Asset Management Corp - were created in October 1999.

Meanwhile, an audit of former top officials of 10 State-owned enterprises such as the State Development & Investment Corp, showed that 1.6 billion yuan (US$190 million) was allegedly used in violation of the law, the report added.

"There are holes in the budget management system of some departments. They make use of their funds to improperly make profits for themselves," Li said.

The National Audit Office had already adopted measures to deal with the problems found in the 2004 audit, leading to savings of over 1 billion yuan (US$120 million), the auditor-general said.

The annual report has been described by local media as "an audit storm" because it makes public cases of embezzlement and malpractice by State departments.

Up to March this year, over 760 people alleged to be responsible for budget transgressions had been administratively punished or had their cases transferred to the courts, Li said.

At yesterday's session of the NPC Standing Committee, Finance Minister Jin Renqing reported that the total fiscal income for China last year, both central and local, was nearly 2,640 billion yuan (US$319 billion) - an annual increase of 22 percent.

The total expenditure was almost 2,850 billion yuan (US$340 billion). The deficit was 319 billion yuan (US$39 billion) last year.

'Iron-faced' auditor stirs storm

He has stirred up a storm across China's cumbersome government departments and is considered one of the most influential people controlling the country's economic activities - not bad for somebody whose job title would usually only elicit stifled yawns. But Li Jinhua is no ordinary auditor, he is the "iron-faced" auditor charged with whipping government budgets into shape.

At 3:30 pm yesterday, Li, auditor-general of the National Audit Office, stepped onto the rostrum in the Great Hall of the People to deliver his annual auditing report to lawmakers.

The one-hour report, straightforward and down-to-earth, singled out misused budgets by a number of governmental departments. The speech won unanimous applause.

Yet the national attention Li commands today was nowhere to be found just a few years ago. Before 1999, Li and the National Audit Office were almost unknown to the public.

The situation changed in 1999 when Li took the post of the auditor-general of the National Audit Office. His first budget report to the national top legislature surprised lawmakers and the whole nation because of its unprecedented candidness and accuracy: It disclosed budget abuses among 43 central governmental departments involving 3.12 billion yuan (US$377 million). The annual report was no longer a routine procedure to be rubber-stamped, it had started to target corruption.

In June 2003, Li criticized four central government departments for severe budget embezzlement. He also revealed the embezzlement of disaster-relief funds as well as economic losses caused by mistakes made by the former China State Power Company.

The report received wide acclaim and put huge pressure on anti-corruption agencies to take concrete actions.

The Chinese media, started to call Li an "iron-faced auditor," and said his report triggered a nationwide "auditing storm."

At the end of 2004, Li Jinhua was selected by the China Central TV Station as one of the ten most influential people in economic fields that year. At the awards ceremony, Li shed tears in front of the cameras.

"The so-called 'auditing storm' was by no means my personal intent. Our auditing work is constantly improving by taking advantage of the country's favorable environment, the essence of which should be the rule of law. If I had no support from the central authorities and the people, I could not achieve anything," Li said.

(China Daily June 29, 2005)