China's Road Construction Funds Misappropriated, State Auditor General Reveals

China's state auditor general, Li Jinhua, has exposed massive misappropriation of funds meant for road construction, amounting to 1.64 billion yuan (US$205 million). The misappropriated funds were used for administration, official bonuses, and other construction projects. Li's annual state audit report to the legislature highlights the misuse of funds in the construction of 21 high-quality roads in 2005.

Key Takeaways:

• A total of 1.64 billion yuan (US$205 million) was misappropriated from the funds meant for road construction, representing one-third of the accounts payable on the construction of the 21 roads.
• Local governments and land requisition departments misappropriated funds for administration, official bonuses, and other construction projects.
• The construction of a highway around Wuhan, Hubei Province, required 10,300 mu (687 hectares) of land with a standard compensation fee of 189,000 yuan per mu, but farmers received only 4,800 yuan per mu.
• Supervision and construction departments of 26 projects misappropriated 2.16 billion yuan for entertaining, conferences, bonuses, external investments, or other construction.
• Auditors found that 14 out of 20 roads checked had failed to meet the average transport capacity cited in their feasibility reports before construction.
• Li attributed the failure to "local governments that purposely overvalued road utility in order to get the project approved".
• Some departments in charge had conflicting roles as decision-makers, supervisors, and builders, leading to corruption and conflicts of interest.

Statistics:

• 1.64 billion yuan (US$205 million) was misappropriated from road construction funds.
• 1/3 of the accounts payable on the construction of 21 roads was misappropriated (1.64 billion yuan) out of a total of 4.92 billion yuan (1,643 million yuan x 3).
• 10,300 mu (687 hectares) of land was required for the construction of a highway around Wuhan, Hubei Province.
• 2.16 billion yuan was misappropriated by supervision and construction departments of 26 projects.
• 14 out of 20 roads checked failed to meet the average transport capacity cited in their feasibility reports.
• 28 out of 34 high-quality roads, with a total length of 5,324 kilometres and a total investment of 166.2 billion yuan, were in use by the end of last year.

Sources:

• Asia Pulse, June 29 (undated)
• State Auditor General Li Jinhua, Annual State Audit Report to the Legislature (2006)