Auditors uncover project funding problems

Chinese auditors have found irregularities in 34 foreign- or partly foreign-funded 2011 projects involving 5.02 billion yuan ($819 million), including 46.65 million yuan in foreign capital.

The figure included a misappropriation of 29.27 million yuan ($4.78 million) in 2011 in four projects that used foreign loans or assistance, the National Audit Office said on Wednesday.

The fraud was found in an audit conducted last year on 94 government projects. The projects were audited in accordance with Chinese law and agreements with international organizations.

Major problems unearthed included violations of laws, regulations and loan or assistance agreements. Also discovered were inadequate internal controls, including fraudulently obtained funds or embezzlement; lax management that led to irregularities in bidding and construction; and irregularities in financial management.

The departments and project executors involved have taken measures to correct the problems, the office said.

The 94 programs cover a wide range of areas, including agriculture, energy, transportation, education, health, urban construction and environmental protection, with a planned investment totaling 407 billion yuan, including 27.5 billion yuan in foreign funds, according to the report.

In 2011, 50.5 billion yuan, including utilization of 1.75 billion yuan in foreign funds, was spent on the projects.

Foreign funds came from five international organizations, including the World Bank, Asian Development Bank and the United Nations Development Programme. Seventeen projects were funded by loans, and the rest were funded by donations or foreign assistance.

The National Audit Office also submitted 93 audit reports to these organizations, the office said.

Executors of problematic projects included those under the Ministry of Environmental Protection, the China International Center for Economic and Technical Exchanges, and the former ministry of railways.

For instance, irregularities in material purchases that involved 439 million yuan were found with a railway project by the former railways ministry. The railway links Lanzhou, in Northwest China, with Chongqing, in Southwest China.

Auditors also discovered that project invoices totaling 414 million yuan, funded with loans from Asian Development Bank, were missing.

According to a similar report published by the office last year, which audited 99 such projects for 2010, irregularities were found with 52 projects involving about 2.1 billion yuan, including 237 million yuan misappropriated in six projects.