China's National Audit Office (CNAO) has found that 272 million yuan (34.8 million U.S. dollars) of the funds allocated to the resettlement of residents displaced by the Three Gorges Dam project in 2004 and 2005 have been misappropriated by local authorities.

The money was used to open local government-run businesses, pay off the debts of other local departments, pay staff salaries in administrative departments, build more office buildings and houses for people outside of the resettlement project and to pay off bank loans, according to the CNAO.

The central government allocated 9.6 billion yuan in resettlement funds in 2004 and 2005.

Five major cases involving misuse of funds have been passed over to judicial and disciplinary departments and some local officials are expected to be punished, but the CNAO did not provide further details.

CNAO audited the use of the resettlement funds in 10 counties and districts of central China's Hubei Province and southwestern Chongqing Municipality in 2006. Given the auditing process only covered certain regions and does not take into account the use of the resettlement money in 2006, the actual total of misappropriated funds could be even higher.

Auditors also found that local authorities claimed an additional 16.94 million yuan by fraudulent means between 2004 and 2005 such as to pay workers who did not actually exist. Some construction enterprises were found to have raised the cost of the resettlement projects unnecessarily.

A total of 1.4 million people are expected to be relocated to make way for the Three Gorges Project, being built on the middle reaches of the Yangtze, the longest river in China.

The majority of people have been relocated to other places in Chongqing and Hubei Province while others were resettled in some eastern and southern provinces.

Launched in 1993 with an estimated cost of 180 billion yuan (about 22.5 billion U.S. dollars), the Three Gorges Project, the world's largest hydro-electric project, will be installed with 26 generators to ensure a combined generating capacity of 18.2 million kw generating 84.7 billion kwh of electricity annually.

Source: Xinhua