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China's top auditing body has released a list of 42 central government departments found to have misappropriated state funds last year.

Violators include key departments such as the National Reform and Development Commission and the ministries of education, health, culture, commerce, personnel, finance, agriculture, public security, railways and civil affairs.

Also on the list are the administrations of customs, sports, forestry, and tourism as well as several ministerial-level institutions including the Chinese Academy of Sciences, Chinese Academy of Social Sciences, and National School of Administration.

An announcement posted on the website of the National Audit Office (NAO) late on Monday named the violators and the details of their irregular implementation of the 2005 central budget.

But the list apparently fell short of the 48 central government departments cited by Auditor-General Li Jinhua in his annual report to the Standing Committee of the National People's Congress (NPC) on June 27.

Li told lawmakers that the 48 departments and 274 affiliated units had misused 5.51 billion yuan (US$688 million) of the central budget in 2005, but did not name them.

The ministries of foreign affairs, State security, national defense and supervision were not included in the list.

The NAO has pledged to open all audit and investigation reports to the public except for those concerning state secrets.

Xinhua News Agency reported yesterday that 13 departments named in the audit announcement had moved to correct their wrongdoings and vowed to tighten control over budgets.

Monday's announcement, however, has again turned the spotlight on the rampant misuse of state funds due to a lack of tight auditing standards.

The transgressions range from reporting non-existent workers or fabricated projects, and embezzling special funds to construct office buildings, to hiding revenues and fabricating expenses.

Auditors also found instances of unauthorized spending of cash surpluses, bogus expense claims for receiving foreign guests, unreported sales of assets, and the embezzlement of special and scientific research funds.

Analysts said the NAO's move to make public the details will ease concerns that it might be taking a less aggressive approach to the issue. 

Since 2003, when the NAO published the full text of its annual audit report for the first time in China's history, Li has won nationwide applause and fame.

Dubbed the "iron-faced auditor," Li triggers an "audit storm" each year with his frank and straightforward account of problems in his annual audit report to the NPC, China's top legislature. As a result, a large number of government departments have been exposed for misappropriating funds.

In response to media reports, one of Li's colleagues reportedly argued that Li had chosen to focus on the bigger picture in his annual report and leave details of specific cases to the daily reporting.

Some of the major cases of misappropriation and irregularities revealed in Monday's audit announcement are:

The People's Bank of China, the central bank, flouted rules and spent 1.01 billion yuan (US$126 million) on purchasing or building fixed assets. It also misused 126 million yuan (US$15.75 million) of operation expenses to pay employee salaries.

A State Forestry Administration department in charge of managing World Bank loans misused 567 million yuan (US$70 million) of funds intended for debt repayment to the World Bank, and spent 1.2 million yuan (US$150,000) to facilitate personal investments by staff.

The Beijing Railway Bureau misused 164 million yuan (US$20.5 million) to build a luxury villa hotel in Beijing's rural Shijingshan District.

The Sports Fund Management Center, affiliated to the State General Administration of Sports, failed to record 138 million yuan (US$17.25 million) of income from the sale of shares in one of its limited liability companies.

In 2002, staff at the center embezzled 27.87 million yuan (US$3.48 million) from the public welfare lottery fund to invest in securities. The money had not been recovered as of end-2005.

Staff at the Welfare Lottery Center, affiliated to the Ministry of Civil Affairs, in 1996 embezzled 50 million yuan (US$6.25 million) to open a fixed-deposit account and collected interest. The company, which is under liquidation, has not returned the principal sum.

The Ministry of Civil Affairs failed to report 749 million yuan (US$93.6 million) in its public accounts.

The Beijing Institute of Technology, affiliated to the Commission of Science, Technology and Industry for National Defense, misused 24.11 million yuan (US$3 million) of scientific research funds to subsidize the purchase of apartments by its employees.

(China Daily September 13, 2006)