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Home >> Business
UPDATED: 08:11, November 24, 2006
Chinese audit report reveals theft of 7.1 bln social security funds
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An audit report published Thursday found that approximately 7.1 billion yuan (about 900 million U.S. dollars) of China's two trillion yuan social security funds had been misappropriated.

According to the National Audit Office, the funds were siphoned off for "overseas investment, commercial loans to companies, construction of government buildings and other purposes."

Of the total, 2.3 billion yuan was stolen before 1999 and 4.8 billion yuan after that, said the report.

"The social security funds, except for sums paid to beneficiaries, must be deposited in banks or used to purchase state treasury bonds," said the report, calling the funds a "high-voltage power line", an indication that no one is allowed to illegally tamper with them.

According to Chinese rules, the government must first ensure the security of the funds and then try to increase their value.

The agency's investigation, which started in September, audited pension, unemployment and health insurance funds in provinces across the country, discovering corruption and inconsistent management.

At a health insurance fund management center in northwestern Ningxia Hui Autonomous Region, the director and financial chief transferred 31.9 million yuan (about four million U.S. dollars) of medical insurance premiums to the personal bank accounts of their friends and relatives.

In Xinmi, in central China's Henan province, 6.4 million yuan of pension insurance funds were deposited in a credit cooperative, a kind of informal bank. The credit cooperative stopped operation in 2002 and the money could not be recovered.

The agency said local governments should do their utmost to rectify these problems. If the losses could not be recovered, the local government should make up the shortfall.

China provided pensions to 43.67 million retired people last year and granted living subsidies to 3.62 million laid-off people. The value of Chinese social security funds has more than doubled since 2000.

Source: Xinhua


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