A total of 200 million yuan (US$24.2 million) in special funds for water conservation projects in Guangdong was misappropriated in 2003, the province's auditors have discovered.

In an audit report to the Standing Committee of the Guangdong Provincial People's Congress on Tuesday, Guangdong chief auditor Zeng Shouxi said irregularities in the use of public funds such as fraudulent applications for funds, unlawful money lending and off-the-books business were serious in government departments.

About 37 million yuan of the funds earmarked for water projects was found to have been paid as salaries for government employees last year. According to rules, special funds can only be used for the purposes set out in government budgets.

Some institutions used special funds to cover shortfalls in medical insurance payouts, contract payrolls and expenditure on maintenances.

False accounting and other types of deception were also found in the accounts of the provincial sports administration when hosting the Ninth National Games in Guangzhou in 2001.

The chief auditor said some institutions used special budget funds for office decoration and cars. Zeng's report also exposed false accounting in the constructions of six expressways and two power stations.

The construction cost of the eight projects was 13 billion yuan, 265 million yuan more than the quoted cost and 27.8 million yuan in taxation had been evaded.

Some government institutions withheld 27 million yuan in land requisition funds and used it on other projects. This resulted in farmers receiving only 20 to 40 percent of the money they were entitled to.

The audit report also revealed that the revenue from 30 tollgates, 22 percent of the provincial total, was not enough to cover the interest on loans while road maintenance fees were extremely high.

It also found that transport authorities, which operate the 133 tollgates in the province, had overspent 99.36 million yuan in administration costs in 2003.

(Shenzhen Daily July 29, 2004)