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Fraudsters syphon billions from China's public purse

Embezzlement, fraud, bribes and waste have accounted for more than US$34.4 billion missing from China's public purse in the first 11 months of this year.

Embezzlement, fraud, bribes and waste have accounted for more than US$34.4 billion (Dh126.34bn) missing from China's public purse in the first 11 months of this year, the country's top auditor says. And the country's fiscal stimulus plan made it even easier for corrupt officials. Officials in Datong in Shanxi province were rebuked for using 760,000 yuan (Dh408,433) set aside for expanding the airport to buy a luxury sports utility vehicle. They received a demerit on their records and the vehicle was auctioned.

"We should enhance officials' awareness of law and set up a clear accountability system at all government levels," Liu Jiayi, the head of China's audit office, told the Xinhua news agency as his office issued its report. Corruption is the most controversial issue in China today. Fearing a popular backlash against workers creaming off public funds, the Communist Party has taken significant, highly public steps to stamp out graft.

The auditors went through the books of more than 20,000 officials and nearly 100,000 companies, including 14 provincial governors and ministerial-level officials, as well as the directors of 12 state-owned enterprises, between January and November this year. The auditors said more than 230 people, including 67 government officials, had been handed over to disciplinary or judicial authorities for roles in the missing funds.

One of China's leading commentators on financial issues, Dr Ye Tan, said the fact that audits were carried out after projects had been started made it difficult to supervise how money was spent. "Next year I think the embezzlement problem will be less severe than this year's, since next year there will be fewer new infrastructure projects being carried out," Dr Ye said. "If our way of auditing changed and if auditors were involved in investment projects from the outset and were able to closely follow projects from the start, then I believe the embezzlement problem could be addressed."

Some bigger projects are ripe for corruption, and Mr Liu said there should be greater oversight on projects such as the reconstruction after the devastating earthquake last year in Sichuan; the Beijing-to-Shanghai high-speed railway; the building of pipelines bringing gas from the far west to the eastern coast; and major dam projects. China's 4 trillion yuan fiscal stimulus plan was also prone to abuse, and the auditors located 88 cases of misspending involving 198 Communist Party cadres.

"In the course of raising domestic consumption, some of the allotted money never reached its destination, and some local funds were not properly managed and regulated," Mr Liu said. In Nanchong city in Sichuan, local leaders were warned or fired for ignoring tendering and bidding rules to award a hospital demolition project worth 2 million yuan. On Hainan island, local water resources bureau officials colluded with contractors to write a false report about a land-conservation project, ensuring payment for the contractors for work not done.

Premier Wen Jiabao has called for greater scrutiny of public funds to prevent shoddy building, known in Chinese as " tofu construction", and vanity projects. business@thenational.ae

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