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Exposed: China’s graft underbelly
- Big-ticket projects under scanner

Beijing, Dec. 26 (Reuters): China’s top financial watchdog today promised to probe some of the country’s most high-profile projects, and its investigators said they found illegal abuses of 290 billion yuan ($36.3 billion) of government funds in the first 11 months of 2005.

A conference of the National Audit Office, which monitors the use of government money, including state-owned companies, heard that 22,000 Chinese officials had been audited up to November, revealing financial abuses to the sum of 35 billion yuan, the official Xinhua news agency reported. Of those, 196 were referred to Communist Party investigation agencies and prosecutors for possible punishment, it said.

The chief of the Audit Office, Li Jinhua, has become a folk hero in China, where his annual reports on government finances have drawn attention to massive abuses.

Li today said in 2006 his inspectors will examine the Three Gorges Dam Project ' the world’s largest dam, which has drawn criticism from environmental protection groups ' as well as Beijing’s Olympics games preparations and venues, and dozens of government ministries.

“If audits uncover bogus budgets, misappropriation, major losses and waste, these will be dealt with sternly under the law and we’ll seek prosecutions,” Li said.

The Audit Office also said it would focus next year on investigating branches of the Bank of China, Bank of Communications and China Merchants Bank.

The Bank of Communications ' the country’s fifth-largest lender ' issued shares on the Hong Kong stock exchange in June. Bank of China, the second-largest, is also preparing to issue shares in its mainland operations.

Li said some Chinese bank branches suffer from “poor internal management and loopholes in internal controls.”

An audit of the Agricultural Bank of China’s headquarters and 21 branches revealed mishandling of 8 billion yuan ($1 billion), Li said.

Many of the bank’s loans were not issued properly, leading to “diversion and misappropriation of large volumes of funds”.

Separately, the China Banking Regulatory Commission said its regular checks this year had uncovered irregularities involving 588.5 billion yuan ($73 billion) in loans and other funds at the nation’s Big Four state lenders.

The Big Four banks are Bank of China, China Construction Bank, Industrial and Commercial Bank of China and Agricultural Bank of China.

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