Audit finds four AMCs violating regulations

Violations of regulation and problems in management have been found in four Assets Management Corporations (AMC) of China. A total of 6.7 bln yuan is involved in these cases, official with the press office of the National Audit Office confirmed Jan 20.

The four AMCs were established exclusively for handling of non-performing assets of the state-owned banks.

At the end of 2004, the leader of the Banking Regulatory Commission of China told Xinhua journalist the four principal AMCs of China had four major problems in handling and managing of non-performing assets, i.e., violation of laws and regulation in peel-off process; violation of laws and regulations in disposal of assets; the process of assets disposal is not transparent, e, g, appraisal is done in a random manner; many connected transaction and inside transactions; false auction and invitation for bids. In terms of the environment for disposal of non-performing assets, laws and regulations are still incomplete; some local governments and departments interference with disposal by administrative power; enterprises escape their debts .

Audit of the four AMCs was a key task of the National Audit Office in 2004. In a report delivered at the national audit conference held in Jan 2005, Li Jinhua, China's Auditor-in-chief, pointed out AMCs' grave problems in three aspects: a number of financial creditor's rights couldn't be realized due to loose control of acquirement of NPLs. Some banks tried to escape responsibilities and cover losses caused by operation that violate regulations through peel-off. The AMCs' dark box operations, falsification and disposal of creditor's rights at low prices had caused loss of state owned assets. Some AMCs' loose finance management had given rise to false report of cash recovered, or embezzlement of cash recovered. Some even used the cash recovered as high salaries and benefits for employees.

By People's Daily Online