China's State Audit Uncovers Misdeeds in Cosco
Intensifying crackdown on corruption China’s National Audit Office released an audit report for state-run shipping conglomerate Cosco Group in which it has uncovered substantial financial irregularities.
The report found that Cosco had falsely left out a sum of RMB298m ($48m) in its revenue for the period from 2008 to 2013, as well as leaving out an expense sum of RMB169m, leading to a total net profit that is RMB129m less than reported.
Several operational violations have also been found in subsidiaries of group, including Cosco Logistics and Cosco Dalian Shipyard, which resulted in huge losses for the group.
The report says that Cosco lacks risk management and strict supervision on vessel charter operations. The group suffered a total loss of RMB34.1bn ($5.49bn) in long term charter deals from 2009 to 2013.
Cosco is not the only state-owned enterprise to come under the office’s scrutiny. A total of 14 state-owned enterprises are investigated. 13 of 14 SOEs audited were found to have violated rules of procurement and bidding. The money restored was only a fraction of the total haul of the nearly 160 billion yuan involved.
The fradulent activities ranged from operational malpractices, shady deals under the guise of business expansion, and bribery among officials.
Liu Jiayi, head of the National Audit Office, said most of the violations took place in sectors involving huge sums of public funding, State assets and State-owned resources, such as land distribution and the mining sector.