Local govts found misusing funds

10:11, April 22, 2010      

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Allegations and charges of misuse involving money from the transfer of State-owned land are not rare among some local government officials.

A report published by the State Auditing Administration on Tuesday shows that 238 million yuan ($35 million) of land-transfer revenue was misused between 2007 and 2008 for the construction of office buildings and residential properties by local governments in four cities, the Economic Information Daily reported Wednesday.

All land in China is State-owned or collectively owned in rural areas.

The income from State-owned land transfers should mainly be used for new countryside construction, including land compensation and infrastructure construction in rural areas, according to a document issued in 2006 by the State Council.

The official report didn't identify the cities but exposed more violations concerning the land-transfer revenue in 11 provinces, including North China's Hebei Province and Northeast China's Liaoning and Jilin provinces.
For example, four unnamed city governments used 968 million yuan ($142 million) from land transfers to increase the registered capital of enterprises invested in by the government.

Another six local governments took out 326 million yuan ($48 million) to pay back loans and for other uses.
Also, the report said that governments in 11 cities illegally dropped 1.96 billion yuan ($287 million) of land-transfer revenue, and three cities transferred 533 hectares of land at a price lower than 70 percent of the base price, the report said.

According to national policy, the base price of land should be updated every three years and adapt to land market changes.

However, the auditor found that five cities in the 11 provinces had not updated the base price of properties over three years.

Among the provinces, three cities' market prices for land were twice the base price set up by the local government.

Other violations concern land use, including issuing permits for land use before a total of 32.3 billion yuan ($4.7 billion) of land revenue had been charged. Some officials kept about 918 million yuan ($134 million) from land transfers for local government, instead of handing it over to the national treasury as required.

About 16 billion yuan ($2.4 billion) of land-transfer revenue has been returned to the national treasury, and 32 government officials have been penalized for their involvement in the misuse based on the auditor's findings, People's Daily reported Wednesday.

The auditor promised to publish further investigation results later, the China News Service reported Tuesday.

Wang Yukai, a professor specializing in public administration at the National School of Administration (NSA), told the Global Times Wednesday that the absence of related laws is the main reason for the increasing number of cases involving misuse of land-transfer revenue.

"The current laws and regulations are not detailed enough to cover the assignment and transfer of land use, which gives local governments a chance to trade land for their own profit," Wang said.

"The auditing authority should cooperate with disciplinary inspection departments and other related departments to correct the illegal behavior," Wang added.

The transfer revenue of State-owned land has become one of the most important financial streams for local governments in recent years.

The Ministry of Finance said that nationwide land-transfer revenue hit 1.42 trillion yuan ($208 billion) in 2009, an increase of more than 43 percent from the previous year, and it also made up 21 percent of the nation's total fiscal revenue last year, the China Securities Journal has reported.

Source: Global Times


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