Mismanagement Leads to US$871m Losses at Key State-owned Firms

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Last updated at: (Beijing Time) Thursday, January 23, 2003

Mismanagement Leads to US$871m Losses at Key State-owned Firms

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Mistakes and poor management at 12 key Chinese state-owned firms led to losses of some 7.23 billion yuan (US$871 million) in 2002, Li Jinhua, auditor-in-chief of the National Audit Office (NAO) said Wednesday.

NGO review of the 12 firms found they accrued the huge losses through malpractice when they provided financial guarantees to other firms, making blind investments or loans.

Government auditors vowed to maintain strict vigilance on the drain of state assets when checking the accounts of major state firms.

One of the state firms, which Li did not name, lost 984 million yuan through such failings.

The NAO "will pay special attention to ensuring the safety and effectiveness of state assets and preventing losses of state properties" after the reform of the state asset management system, Li pledged.

The reform would involve the division of ownership rights between the central and local governments, with specialised entities taking over responsibility from various ministries.

Government auditors scrutinised the balance sheets of China Construction Bank and the Agricultural Development Bank of China last year and found evidence used in the prosecution of 51 economic crime cases, involving 74 bank officials and 2.27 billion yuan.

The NAO selects several major state banks each year for auditing.

It will review the Industrial and Commercial Bank of China and China Life Insurance Co. Ltd. this year, along with the State Administration of Taxation and the General Customs Administration.

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