BEIJING, Dec. 27 -- In the first 11 months of this year, Chinese auditors have discovered illegal abuse of 290 billion yuan (US$35.8 billion) of government funds.

    A conference of the National Audit Office (NAO), which monitors the use of government money including State-owned enterprises also heard that 22,000 officials had been audited up to November.

    Of them, 196 officials were found to have been in violation of laws and regulations, and were dealt with by supervisory or judiciary organs, officials said on Monday.

    The frequent occurrence of irregularities in branch offices of domestic banks have aroused concerns among auditors, who promised to tighten scrutiny next year.

    Li Jinhua, auditor-in-chief of NAO, said the books of some branches and sub-branches of Bank of China (BOC), Bank of Communications and China Merchants Bank will be checked in 2006.

    A string of major fraud cases were found this year in sub-branches of banks, triggering widespread worries about China's financial risks.

    In a typical case, the head of one of Bank of China's Harbin sub-branches embezzled 290 million yuan (US$35.8 million) and vanished at the beginning of this year.

    The China Banking Regulatory Commission said yesterday it had punished 799 staff members of the country's Big Four State banks after finding they were involved in illegal or unauthorized loans totalling 588.5 billion yuan (US73 billion).

    The banking watchdog said in a report the wrongdoers were working in 103 institutions of the Big Four, including the Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of China.

    This year, NAO audited the headquarters and 21 branches of the Agricultural Bank of China.

    Auditors also checked 22 county-level sub-branches of the bank.

    The inspection found 51 suspected irregularity cases involving 8 billion yuan (US$987 million). Almost all the cases happened in the sub-branches.

    Li told the conference that in these sub-branches, irregularities were common when granting individual consumption loans, real estate development loans and land reserve loans.

    Some branches were also found to embezzle deposits or illegally attract deposits with interest rates higher than those set by the central bank.

    Li attributed the problems to imperfect internal control systems and poor internal management, bad supervision and restraint systems and insufficient management from higher-level branches or headquarters. Enditem

(Source: China Daily)