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People's Daily Online>>China Business

Audit shows fraud on high-speed rail project

By Xin Dingding (China Daily)

08:02, March 20, 2012

A bullet train snakes its way along the Beijing-Shanghai High-Speed Railway. (Chen Fei / Xinhua)

A report released by the National Audit Office on Monday showed more evidence of fraud, waste, mismanagement and irregular procurement totaling billions of yuan connected to the Beijing-Shanghai High-Speed Railway.

The report marked the end of a three-year audit aiming to regulate the major railway project's management and use of funds.

Most of the problems pinpointed have been corrected, said a senior audit official, adding that the railway sector will remain its focus in the future.

The third audit report into the rail link that opened in June last year found that irregularities started from the bidding process on the project as early as December 2007, five months before construction began.

Auditors found the Ministry of Railways shortened the period for bidders to get preliminary review application documents to 13 hours from the standard five days, and cut the period for bidders to submit applications to less than 24 hours from the standard seven days.

Purchases that were not made through standard bidding involved 849 million yuan ($134 million). In one case, the project's chief constructor, Beijing-Shanghai High-Speed Railway Co, was found to have bought at least 77.86 million yuan worth of materials from non-bidding suppliers since October 2009, part of which were bought at higher prices than those quoted by winning bidders.

The company also purchased 698 million yuan worth of materials in August 2009 from as many as 10 bidding suppliers, instead of following bidding principles to find the most economic combination of suppliers.

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