Auditor-General Li Jinhua reported Wednesday that 1.4 billion yuan (US$170 million) of the 2003 budget was misused or wrongfully appropriated.

In his audit report delivered to the Standing Committee of the 10th National People's Congress (NPC), Li said malpractice cases were found in 41 of the 55 central government departments under investigation.

Most of the money, originally allocated for specific purposes, has gone into the hands of staff members or to office building construction.

The General Administration of Sports provides one example. Since 1999, that administration has appropriated 131 million yuan (US$15.8 million) for the Beijing Olympic organizing committee.

About 109 million yuan (US$13.2 million) of the money was used to put up apartment buildings for its employees and the rest was invested into companies, according to the audit report.

Misuse of funds for poverty alleviation was particularly serious last year in more than 590 poverty-stricken counties that the National Audit Office examined.

Li said most of the low-interest loans that should have gone into the pockets of farmers were used in the transportation, electrical power and communication industries.

For instance, only 2.8 million yuan (US$340,000) in low-interest loans in southwest China's Chongqing Municipality was allocated to farmers, accounting for merely 0.3 percent of the total loans to aid the poor. As a result, many farmers had to borrow money from rural credit cooperatives at an annual interest rate of 6 percent, said Li.

The National Audit Office also discovered several illegal activities in sales of land-use rights in 10 cities around China, while farmers were not adequately compensated for land expropriation.

A private company in central China's Hubei Province allegedly defrauded the compensation fund of more than 18 million yuan (US$2.2 million) by colluding with a local township government.

Appropriation of farmland was rampant in some areas. The Oriental University City Company, for instance, illegally rented at least 380 hectares of farmland to build golf courses at the border of Beijing and Hebei Province.

Li said the country's fiscal revenue last year topped 2 trillion yuan (US$242 billion) for the first time, a rise of 14.9 percent year-on-year. Although the figure gave officials reason to smile, the low returns on government-invested projects have given them some cause for concern, said Li.

He said a quarter of some 526 infrastructure projects nationwide were not completed as scheduled, and 119 out of 320 selected projects, although finished, cannot be put fully into operation.

The construction of a gasworks in central China's Henan Province is a good example. It was begun 16 years ago with an investment of 2.3 billion yuan (US$278 million) and finished in 2001.

Despite significant changes in the gas market during those 16 years, local policymakers failed to readjust the original plan. As a result, the facility has been in the red since it went into operation.

The audit office also scrutinized the preceding year's tax records of 788 enterprises nationwide. It found tax evasions worth a total of 25.1 billion yuan (US$3 billion) for the period January 2002 to December 200.

The tax bureau of Tangshan, in north China's Hebei Province, had unlawfully allowed 13 local iron firms to defer tax payments of more than 1 billion yuan (US$121 million) since November 2002.

So far, more than 70 local officials involved have been disciplined and two cases have been referred to the courts.

(China Daily June 24, 2004)