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 user 2005-01-13 at 10:27:00 am Views: 62
  • #11268

    China Finds Cheating on Financial Reports

    SHANGHAI, China (Jan. 12) – China’s inspection of audits of 181 major state companies’ financial reports found widespread cases of incomplete reporting, serious asset losses and outright fabrications, official media reported Wednesday.

    China has been boosting oversight of state-controlled enterprises – some of which are among the country’s biggest corporations – following scandals over unauthorized dealings, theft of state assets and other matters.

    Inspection results, reported Wednesday, said that 13 of the companies had lied in financial reports and that 120 had submitted incomplete reports, the official Xinhua News Agency said.

    It did not name the suspected companies.

    The report said that 40 companies had lost more than 10 percent of their total assets in 2004 and another 40 had lost more than 20 percent.

    Meng Jianmin, an official with the State-owned Assets Supervision and Administration Commission, blamed most of the losses of state assets on “intermediaries” hired to handle financial dealings.

    “The key troublemakers are those financial intermediaries,” Xinhua quoted Meng as saying. He added that a “great proportion of these intermediaries are actually not acting on their duties, some are even helping the state-owned enterprises to conceal facts, as they are paid by them.”

    The state assets agency has ordered 16 major state companies to undergo special audits by accounting firms of its choice for 2004, the state-run newspaper 21st Century Business Herald reported.

    The companies include China’s state power utility, the company in charge of aircraft procurement, the government’s real estate developer and the state textiles import and export company, the report said.

    The audits follow a series of corporate scandals that have accentuated concerns over mismanagement and other abuses by executives.

    Singapore authorities began investigating China Aviation Oil (Singapore), a state company that supplies most of China’s commercial jet fuel, after it recently declared losses of US$550 million (euro420 million) from speculative trades.

    On Tuesday, troubled dairy giant Inner Mongolia Yili Industrial Group Co. reported a loss of 12.2 million yuan (US$1.5 million; euro1.2 million) from sales of government bonds after prices fell sharply. The company had set aside provisions to cover the loss.

    Earlier this month, Yili said that five of its senior executives, detained in December, had been formally arrested on suspicion of embezzlement.

    Late last year, the government began requiring state-owned companies’ presidents to sign performance contracts with the state assets agency as part of an effort to tighten controls on wayward or inept managers.