COSCO Group Among China State Firms That Falsified Revenue and Profit, Auditor Says

A Chinese national flag flies in front of COSCO’s headquarters in Beijing in this 2010 file photo. (c) REUTERS/Barry Huang

By Bloomberg News

(Bloomberg) — Some of China’s biggest state firms were found to have falsified revenue and profits, while some state lenders doled out loans to unqualified borrowers, the nation’s auditor said amid an intensifying crackdown on corruption.

Fourteen state-owned companies, including State Grid Corp., Cosco Group and China Southern Power Grid Co., falsified 29.8 billion yuan ($4.8 billion) in revenue and 19.4 billion yuan in profits, the National Audit Office said in a statement on its website Sunday. The office issued its 2014 work report Sunday, along with several statements and audit reports for individual companies.

A key focus of the National Audit Office’s work last year was revealing violations in the approval, allocation and management of public funds, state-owned assets and resources, the office said in the statement. The comments come amid an anti-graft campaign by President Xi Jinping — who calls corruption a threat to the Communist Party’s survival — that has snared about 100,000 officials in the past two years.

Inadequate due diligence and violations in decision-making procedures had cost the firms as much as 1.64 billion yuan in wasted resources and 35.4 billion yuan in “losses or idle assets,” the auditor said.

The statement said 4 billion yuan had been recouped from the state-owned companies and more than 250 people had been penalized. The audit office handed over 56 serious cases to “relevant departments,” it said.

Violations also were found in the nation’s financial industry, the audit office said. Some 16.8 billion yuan in loans from Bank of Communications Co., China Development Bank Corp. and China Export & Credit Insurance Corp. were found to have violated rules.

China Development Bank, a policy lender, broke rules on 13 billion yuan of loans it disbursed since 2005, while Bank of Communications, China’s fifth-largest lender by market capitalization, was found to have given out 3.8 billion yuan of loans to unqualified projects and companies between 2008 and 2014, the auditor said.

©2015 Bloomberg News

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