Fraud in projects involving foreign loans uncovered

Report also finds inferior bidding procedures, lack of supervision

Chinese auditors have uncovered 237 million yuan ($37 million) of funds misappropriated in six projects that used foreign loans and assistance, the National Audit Office announced on Monday.

The frauds were detected in an audit conducted last year on 99 government projects that had received loans and assistance from international organizations and banking institutions such as the World Bank, Asia Development Bank, the United Nations Development Program and Department for International Development of the United Kingdom.

The report said the audited projects include agriculture, energy, transportation and urban construction. Among them, 20 used foreign loans and 79 were projects by foreign organizations.

The report also found substandard bidding and a lack of supervision involving about 650 million yuan in 18 of the projects.

As of the end of 2010, these projects had taken foreign capital worth 34.5 billion yuan.

The total planned investment for these 99 projects was more than 424 billion yuan, according to the office.

China's office of the UK Department for International Development, whose projects for tuberculosis treatment, rural medical care and water resources have been found to have auditing problems, confirmed that they received the report from the office last year.

China Daily's request for the office to comment on the auditing report and its possible influence went unanswered.

The report said the World Bank sponsors 46 projects that have been audited.

In a statement released by the National Audit Office, the office said the management and implementation of foreign-related projects are generally standard, especially in the use of funds from overseas organizations.

The statement said that in recent years three kinds of problems are found in the projects with foreign funds and assistance: capital misappropriation, poor supervision and management, as well as substandard accounting.

It said most of the problems have been corrected, and individuals who have broken the law will be subject to criminal punishment.

The National Audit Office also released a report on Monday, in which misappropriation of 128 million yuan in 34 environmental protection projects with foreign loans and assistance was detected.

zhaoyinan@chinadaily.com.cn