The Ministry of Labour and Social Security on Friday ordered its local branches to establish a rapid reporting system to ensure the safety of social security funds.

The move comes in the wake of a series of fund scandals.

Labour and social security bureaus at all levels should report any misappropriation or fraud involving the funds as soon as they are detected, according to the order.

Cases involving less than 500,000 yuan (US$62,500) should be reported to provincial level supervision organizations, while those involving more than 500,000 yuan should be reported to the ministry.

Officials heading the local supervision branches who turn a blind eye or delay, hide or lie in the reporting process will be reprimanded, given administrative punishment or even turned over to judicial organs.

A National Audit Office report published last month said that around 7.1 billion yuan (US$900 million) of the country's 2 trillion yuan of social security funds have been misappropriated.

Speaking at a meeting with more than 130 local labour and social security officials from around the country, Vice-Minister Liu Yongfu ordered local officials to redress these problems and trace and recover misappropriated funds.

The incomplete supervision system and lax regulation enforcement have led to frequent violations, Liu said.

"The disorderly management in some places has left loopholes for criminals and inflicted huge losses," he said.

Despite a spate of scandals that have shocked the country, Liu insisted that the country's social security fund safety is improving and the trend of mass misappropriation has been curbed.

Liu ordered local officials to address their problems, and recover and repay funds within a set time. Those who are found responsible will be severely punished. Local governments will have to reimburse funds that cannot be reclaimed.

Liu instructed local labour and social security officials to submit their rectification plan by the end of the year and conduct a self-inspection before a thorough audit by the National Audit Office next year.

Liu said that an information release system would be gradually set up starting from next year. Labour and social security bureaus at all levels would release information on collection, management, use and operation of social security funds on a regular basis.

By the end of next year, the management and operation of company pensions will be gradually shifted to independent organizations, Liu said.

Cui Huilie, supervision director of the ministry dispatched by the Central Discipline Inspection Commission, said that though the overall situation of fund management is good, misappropriation and violation of regulations are still rampant in some places.

"Most notably the scandal in Shanghai exposed the problems and weaknesses in current fund management and supervision," Cui said.

Dozens of city officials and business people, including Chen Liangyu, Party secretary of Shanghai, have been sacked and put under investigation due to alleged involvement in a multi-billion yuan fraud.