June 29, 2015 7:17 am
China graft probe uncovers falsified revenues at large SOEs
Patti Waldmeir and Gabriel Wildau in Shanghai
China’s state auditor has uncovered falsified revenues and profits in the accounts of some of the country’s biggest state-owned companies, as Beijing broadens its assault on official corruption.
The National Audit Office said on Sunday that 14 state-owned groups, including well-known names such as State Grid, China Ocean Shipping Co (Cosco) and China Southern Power Grid, falsified nearly Rmb30bn ($4.8bn) in revenue and nearly Rmb20bn in profits in 2013.The revelations came in the auditor’s annual work report summarising the results of its reviews of government spending, as well as state-owned enterprises.
It follows audits last year that exposed problems at China Investment Corporation, the sovereign wealth fund, Bank of China, the fourth-largest lender, and Agricultural Development Bank, a policy lender.
The audit office’s more aggressive stance towards state champions is part of a huge clampdown on corruption and misuse of public funds in areas ranging from mah-jong to top company executives, more than 100 of which have been detained on suspicion of corruption since the start of last year, according to official statistics.
Last week, a separate agency, the Communist party’s anti-graft watchdog, said it would probe China Railway Corp, China Aluminum Corp and People’s Daily, the official party mouthpiece, in the latest round of inspections at state companies.
The state auditor blamed poor due diligence and decision-making procedures for wasting Rmb1.6bn in resources and Rmb35bn in “losses or idle assets”. The auditor said Rmb4bn had been recouped from the companies involved and 250 people penalised.
The audit office statement said 56 serious cases had been handed over to “relevant departments”, probably a reference to prosecutors or the party’s anti-corruption commission.
Loans worth Rmb17bn from Bank of Communications, China Development Bank and China Export and Credit Insurance had violated rules, the auditor said.
China Development Bank, a non-commercial policy lender that supports infrastructure and foreign development loans, violated rules on Rmb13bn in loans disbursed since 2005. Bank of Communications, China’s fifth-largest by assets, gave out Rmb3.8bn in loans to unqualified projects and companies between 2008 and 2014, the auditor said.
Last week, the national auditor uncovered misappropriation of nearly Rmb17bn in funds from the state lottery programme. Funds were misappropriated through the buying and building of office buildings and hotels or embezzled, the National Audit Office said.
Irregularities accounted for a quarter of the total of lottery funds received in 2012-14, the audit office said.
The state-run sports and “social welfare” lotteries are the only legal form of gambling allowed in mainland China and on current rates of growth lottery ticket sales are expected to eclipse those in the US by the end of next year, making China the world’s biggest lottery market.
China’s Auditor Says State Firms Falsified Revenue and Profit
June 28, 2015 — 3:06 PM SGT
Some of China’s biggest state firms were found to have falsified revenue and profits, while some state lenders doled out loans to unqualified borrowers, the nation’s auditor said amid an intensifying crackdown on corruption.
Fourteen state-owned companies, including State Grid Corp., Cosco Group and China Southern Power Grid Co., falsified 29.8 billion yuan ($4.8 billion) in revenue and 19.4 billion yuan in profits, the National Audit Office said in a statement on its website Sunday. The office issued its 2014 work report Sunday, along with several statements and audit reports for individual companies.
A key focus of the National Audit Office’s work last year was revealing violations in the approval, allocation and management of public funds, state-owned assets and resources, the office said in the statement. The comments come amid an anti-graft campaign by President Xi Jinping — who calls corruption a threat to the Communist Party’s survival — that has snared about 100,000 officials in the past two years.
Inadequate due diligence and violations in decision-making procedures had cost the firms as much as 1.64 billion yuan in wasted resources and 35.4 billion yuan in “losses or idle assets,” the auditor said.
The statement said 4 billion yuan had been recouped from the state-owned companies and more than 250 people had been penalized. The audit office handed over 56 serious cases to “relevant departments,” it said.
Violations also were found in the nation’s financial industry, the audit office said. Some 16.8 billion yuan in loans from Bank of Communications Co., China Development Bank Corp. and China Export & Credit Insurance Corp. were found to have violated rules.
China Development Bank, a policy lender, broke rules on 13 billion yuan of loans it disbursed since 2005, while Bank of Communications, China’s fifth-largest lender by market capitalization, was found to have given out 3.8 billion yuan of loans to unqualified projects and companies between 2008 and 2014, the auditor said.