China Watch Blog has learnt that irregularities have been found in 17 of China’s central government-owned companies involving a combined tens of billions of yuan, China’s top audit office said yesterday.
These entities cover a variety of industries, including finance, energy, steel and telecommunications. A total of 87 relevant officials have been punished, the Shanghai Daily reported, citing the National Audit Office as saying in a statement.
Two financial institutions, the Industrial and Commercial Bank of China and the conglomerate CITIC Group, were found violating regulations on lending and auditing by the end of 2010.
Nine branches of ICBC were found to have given 9.5 billion yuan (US$1.5 billion) in credit to unqualified projects, land development organizations and financing vehicles of local governments. Irregularities were also found in loans of 1.5 billion yuan granted to individuals.
The CITIC Group failed to include assets worth 6.3 billion yuan belonging to its subsidiaries in the group’s financial statements. Ten of the group’s subsidiaries overstated their profits by 374 million yuan.
Oil giants China Petroleum and Chemical Corp, also known as Sinopec, and PetroChina, which have constantly received government subsidies for losses in their refining business, were found understating profits by 1.4 billion yuan and 1.5 billion yuan, respectively, in 2010.
Shanghai-based Baoshan Iron and Steel Co was found overstating profits by 1.6 billion yuan. It also violated China’s industrial regulations by adding production capacity without approval.
The audit office said that 97 percent of the discovered flaws have been corrected, 223 new rules have been drafted, and 87 persons responsible have been “seriously handled.”
Irregularities were also found in companies such as China National Coal Group, China Merchants Group, China Telecom, and China First Automobile Works Group.
The office said state-owned enterprises have generally improved their management and competitiveness in the past years though there were some loopholes in their audit books, investments, project management, and supervision of their subsidiaries.If you think China Watch Blog's information is useful, click on cup of coffee on left hand side and make a small contribution via PayPal