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Home >> China
UPDATED: 19:37, June 27, 2007
Chinese auditors reveal billions of yuan in misappropriated social security funds
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China's top auditor said on Wednesday that his department's investigation of the management of social security funds revealed that a total of 7.1 billion yuan (921 million U.S. dollars) of social security funds had been misappropriated in various parts of the country.

Li Jinhua, Auditor-General of the National Audit Office (NAO), said in his annual report to the Standing Committee of the National People's Congress (NPC) that his office has, in two separate investigations, uncovered 4.79 billion yuan misused since 2000 and another 2.35 billion yuan prior to that.

The highest-profile case involved Chen Liangyu, Party chief of Shanghai, who was sacked from his post last year.

The NAO has audited three kinds of social security funds in 29 provinces -- basic company endowment insurance, basic medical insurance for urban workers, and unemployment insurance.

He said that local governments had embezzled 2.25 billion yuan for investments in local or foreign enterprises, for illegal loans or to pay for office buildings or everyday expenses since 2000.

Management of another 2 billion yuan also contravened the law, according to Li, without providing details.

"Overall management of social security funds was satisfactory," Li said, "but there were serious problems in some areas."

Auditors found the Ministry of Finance failed to return 17.4 billion yuan of untapped project funds to the central budget.

This created difficulties for the NPC in supervising budget expenditure, Li said.

Auditors also found nine central government departments did not provide sufficient detail about the way they spent 9.7 billion yuan, or 35 percent of the money they received from the central budget last year.

"The practice makes precise budgeting problematic," Li said.

The ministry allocated 45 million yuan of non-budgeted funds to itself and the Central Bank for running costs, Li said.

"All expenditure must be set out in the budget," Li said.

Special funds which have been misappropriated also included compensation for people forced to be relocated by the Three Gorges project and the natural forest protection fund, according to the report.

Local government departments in Hubei Province and Chongqing Municipality have misused 289 million yuan of the compensation funds set aside for the people displaced by the Three Gorges project and have already been reported to the procuratorates for investigation, Li said.

About 130 million yuan of the natural forest protection fund has been embezzled in 17 provinces.

Source: Xinhua

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