China's National Audit Office (NAO) took a whole year to complete the 2004 financial audit of the 32 ministries, committees, and offices under the State Council. The results revealed that the national institutions, under the control of the Communist regime, have fallen into severe and systematic corruption.
National Audit Staff Under Tremendous Pressure
In December of 2005, the National Audit Office submitted an audit report to the State Council Standing Committee of the National People's Congress and the CCP's Central Commission for Discipline Inspection. The report unveiled that among the 32 top central government organs, including ministries, committees, and offices, there was 50 billion yuan (approximately US$6.17 billion) of related illicit financial operations in 2004.
The whole auditing process took about a year to complete and was repeated three times. The first was in early 2005; the second in mid June, and the third in late October.
In the auditing report, the Audit General of NAO complained that the restrictions from higher officials and the systems they had to work with frustrated the auditing staff. There were many local ministries that could not carry on their duties.
Six General Problems Found
The audit unveiled six types of illicit operations: (1) Over-budgeting and budgeting with fabricated staff numbers are very common and account for over-budgeting of 50 to 300 percent. (2) Keeping separate books, one for internal use, one for external use, one for higher authorities, and one for the department itself. (3) Keeping separate accounts. Public funds were usually drafted into separate accounts; some were even separated among individuals. (4) Using public funds to pay bonuses, compensation for illegal operations, and other internal perks for officials and staff. (5) Using public funds in financial, activities such as stock and real estate. In some cases, public funds were used to operate in the US and European markets. (6) Unauthorized fee increases. The income was used to pay bonuses to leaders and departments.
Editor of Trend Magazine Says a Blood-sucking Machine Is Ruling China
The facts unveiled by the audit report are the latest evidence of China's systematic corruption caused by the CCP's one party dictatorship. The whole organization is corrupt. Everyone inside the organization is corrupt. The illegal money is distributed according to a person's rank. This is different from individual corruption. The corruption of an individual is illegal, while the corruption of a whole organization is “legal” and can even be public. It is generated by the system and is apparent in an audit.
Can it be dealt with as a crime? The answer is No because the whole government organization would have to be sacked if the problem were really dealt with according to the law. That would be the end of the functioning of the state machine. Does the CCP dare to take the risk? Definitely not, because everyone from top to bottom in this machine is corrupt. Nobody dares to audit the books of the higher echelons.
Not only are the central government and state organizations like this, but it is the same for each provincial, municipal, county, town and village government. Everyone in power is unsupervised; they can do whatever they want. What emerged from this audit is the fact that a blood sucking machine is ruling China, a fact that the CCP will never expose to public scrutiny.
Data on illicit financial operations uncovered by the audit of government institutions follows:
Illicit financial operations in the Ministry of Foreign Affairs (MOFA), National Department of Reform Commission (NDRC), The Ministry of Education (MOE) and The Ministry of Science and Technology (MOST)
MOFA has 580 million yuan (approximately US$71.6 million) of public funds saved in two investment companies with high interest. Sixty million yuan (approximately US$ 7.4million) interest was used for bonuses. US$180 million were saved in seven bank accounts under the name of the MOFA.
NDRC was 250 million yuan (approximately US$30.8 million) over-budget and misused 42 million yuan (approximately US$5.2 million) for internal perks and compensation.
MOE retained 5.5 billion yuan (approximately US$679 million) for departmental use which was to be used in the nation's education system. Three organizations under MOE collected 337 million yuan (approximately US$41.6 million) in unauthorized exam fees. Government subsidies for overseas trips or domestic travel exceeded the budget by 28 percent.
MOST withheld 6.4 billion yuan (approximately US$790 million) of annual science and technology funding. A total 2.8 billion yuan (US$345 million) was withheld for special project funds provided by the State Council for the Ministry; 40 unauthorized accounts were opened and carried one illegal loan activity to collect interest.
Illicit Financial Operations in the Ministry of Civil Affairs (MOA), the Ministry of Finance (MOF), and the Ministry of Land Resources (MOLR)
MOA was over-budgeted 7.83 billion yuan (approximately US$966 million). The funds were embezzled into real estate development, traffic, and transportation businesses. Not all of the generated income was recorded in the books; some was used as internal bonuses, staff bonuses, and public relations expenses.
MOF was over-budget by 1.2 billion yuan (approximately US$148 million) based on falsified staff numbers. The MOF opened 18 illicit accounts in the names of individuals or departments and illicitly used the funds as bonuses.
MOLR over-budgeted 2.5 billion yuan (approximately US$309 million) for illicit investment of 1.5 billion yuan (approximately US$185 million). The MOLR generated illicit income of more than two billion yuan (approximately US$246 million) from commercial housing and office building projects. None of these operations had clear records.
Illicit Financial Operations in the Ministry of Railway (MOR), the Ministry of Communications (MOC), and the Ministry of Information Industry (MOII)
MOR fraudulently listed 330 nonexistant staff and withheld US$330 million for Ministry use, which was budgeted for importing equipment and vehicles. Five billion yuan (approximately US$617 million) that was supposed to be used for railway branch line reconstruction projects was withheld from use.
MOC withheld and misappropriated 5.1 billion yuan (approximately US$638 million) special funds for communication construction projects. Part of the funds were invested in real estate, futures markets, and the gold market, which caused a 700 million yuan (approximately US$86 million) loss.
MOII, misused 3.75 billion yuan (approximately US$462 million). The funds were used in real estate markets in Beijing, Guangdong, Qingdao, Shanghai, and Zhejiang provinces. Within the year, there were over 200 million yuan (approximately US$24.7 million) public relations activity expenses without documented reasons.
Illicit Financial Operations in the Ministry of Water Resources (MWR), the Ministry of Health (MOH), and the General Administration of Civil Aviation (CAAC)
MWR withheld funds designated for special water resource projects in the amount of 4.5 billion yuan (approximately US$555.5 million). The audit found illicit real estate investments of 850 million yuan (approximately US$105 million). Illicit compensation and payoffs of more than 75 million yuan (approximately US$9.3 million) were also found.
MOH misused public health special project funds of 780 million yuan (approximately US$96.3 million). Illicit political patronage and compensation expenses amounted to 130 million yuan (approximately US$16 million). The MOH opened 20 illicit accounts; capital totaled up to 1.73 billion yuan (approximately US$213.6 million).
CAAC misused 770 million yuan (approximately US$95 million) in special project funds to build hotels in Shanghai, Guangzhou, Beijing, Nanjing and Chongqing. It took one billion yuan (approximately US$123.5 million) to run loan businesses and used interest income for internal bonuses and other perks.
Illicit Financial Operations in the General Administration for Customs (GAC), the General Administration of Sports (GAS), and the State Administration of Radio Film and Television (SARFT)
GAC over-budgeted 2.5 billion yuan (approximately US$308 million) and illegally withheld or wrote off 17.3 billion yuan (approximately US$2.135 billion) for taxes. The money was used to pay abnormally large salaries, payoffs, and compensation. It withheld and confiscated properties and fines that the Administration then used internally. In Customs in Guangdong, Shanghai, Jiangsu, Fujian, Zhejiang, Shandong, Liaoning, staff salaries and other compensation were three times as high as the figure stated in GAC's policy. The extra money came from over budgeting, withholding taxes, and embezzlement.
GAS over-budgeted 750 million yuan (approximately US$92.6 million), withheld sports lottery income of 655 million yuan (approximately US$80.8 million), and embezzled 450 million yuan (approximately US$55.6 million) from donations to build luxury residential houses.
SARFT withheld 533 million yuan (approximately US$65.8 million) in taxes and increased fees without authorization. All the extra income was used for internal bonuses, political patronage, and overseas travel expenses.