Sinosteel may face management audit

Sinosteel, the country's largest iron ore trader, said Thursday that its financial management is under control after reports spread Monday that the company was suffering from major problems.

"Sinosteel's businesses both at home and abroad is running normally and orderly. As of the end of August, our sales revenue and profits reached the highest level in history," said the company, providing no exact figures.

Sinosteel didn't mention whether the National Audit Office (NAO) had audited the company's finances as media reported. But a source told the Global Times that the NAO did visit the company in May.

The NAO found problematic commissions totaling $50 million, Century Weekly Magazine reported Monday.

"These commissions were paid in cash, which is rare. Normally, the company pays commissions through contracts that account for three to five percent of trading value," the magazine quoted a senior executive with Sinosteel's wholly-owned Sinosteel International Holding under the condition of anonymity.

The magazine said the company's shipping businesses is also questionable. Sinosteel consigned 80 percent of its freight cargo businesses in recent years to two small Hong Kong-registered shipping firms, the magazine reported.

The 21st Century Business Herald reported Thursday four of Sinosteel's six bases built for developing overseas resources are suffering losses.

The report referred to the State-owned company's nickel ore bases in Indonesia and the Philippines, and iron ore bases in Australia and India.

Phone calls to Sinosteel's spokesman Li Kejie went unanswered. The company's Division of Auditing &Supervision declined to comment. The NAO did not reply to an interview enquiry.

Sinosteel brought in a sales revenue of 164 billion yuan ($24.07 billion) last year, ranking number 352 on the 2010 Fortune 500 List.

On June 14, the NAO said in an announcement the China Eastern had misused nearly 103.5 million yuan ($15.20 million) in funds for staff bonuses, subsidies and other purposes from 2004 to 2008.

The announcement triggered official dismissals and corruption investigations in the aviation industry.

Source: Global Times