Alleged embezzlement not found in charity: gov't

Smile Angel Foundation founder Li Yapeng attends a summer camp organized by the charity group on July 26, 2014. [Photo/IC]

BEIJING - Chinese authorities said on Tuesday no offenses were found after a probe into alleged embezzlement by a charity group.

In January of this year, Zhou Xiaoyun, a former investigative reporter and web celebrity, reported to the Ministry of Civil Affairs (MCA) that Smile Angel Foundation (SAF), a charity group that donates to children with cleft lips from poor families, embezzled donated money. The accusations caused a fresh stir as the nation's charity sector grappled with a trust crisis caused by frequent scandals.

Zhou accused the SAF of failing to explain the whereabouts of donated money worth 70 million yuan ($11.3 million).

Zhou said the SAF spent 110 million yuan from 2006 to 2012, which means donations for each surgery averaged 99,000 yuan, far exceeding the 5,000-yuan cost for other charity groups.

The MCA entrusted the SAF's supervisor, Red Cross Society of China (RCSC), to investigate the case, and the RCSC later hired a third-party auditor to do the job.

After the audit, the SAF was found to have received charity money worth 142 million yuan from 2006 to 2013 while spending roughly 130.4 million yuan.

Among the expenditures, 53.22 million yuan went to subsidizing SmileAngel Children's Hospital, 40.02 million yuan was spent on 9,616 surgeries, 31.12 million yuan went to quake-relief donations, academic exchanges and brand promotion, and 6.03 million yuan was used for administration costs.

The foundation has a balance of 11.71 million yuan, according to the audit results.

The MCA backed Zhou's request for disclosures of the SAF's annual work reports, saying that such foundation reports should be published for public review and supervision.

Established in November 2006 by actor Li Yapeng, the SAF is one of the most popular charity groups in China. It was registered as a specialized fund under the RCSC's affiliated Chinese Red Cross Foundation.

The reputation of Chinese charity groups, especially the RCSC, took a major hit in 2011 when a woman calling herself Guo Meimei claimed on social media that she managed an organization under the charity while flaunting her wealth and extravagant lifestyle.

The incident triggered public concern about embezzlement and improper management within charities.

The controversy surrounding the case was reignited after Guo was detained for gambling during the World Cup and organizing other gambling activities.

Guo said her wealth had no ties to the charity and she wanted to clear the RCSC's name during her confession, which was made public earlier this month.