Friday, November 24, 2006

Chinese Social Security Scandal

Just like any other government the Chinese new market orientated bueracracy lines its own pockets at the peoples expense. While the people suffer increased poverty despite the market boom in China, those who rely upon China's bare bones social safety net find that the bueracrats have looted the treasury. Not unlike attempts in the West to loot pensions and social security to invest in the market. China is truly becoming a capitalist economy. And gosh it's just like that other One Party State; Alberta .

State auditors find 7.1 billion yuan misappropriated in social security funds

The National Audit Office has found that 7.1 billion yuan of China's 2 trillion yuan in social security funds had been misappropriated.

The money was siphoned off for "overseas investment, commercial loans to companies, construction of government buildings and other purposes", according to a report released by the state agency. Of the total, 2.347 billion yuan was stolen before 1999 and 4.788 billion yuan after that.

The agency started the investigation in September on pension, unemployment and health insurance funds across the country and it discovered corruption and inconsistent management.

The agency's report insisted that the social security funds, except for sums paid to beneficiaries, "must be deposited in banks or used to purchase state treasury bonds". It said the funds were a "high-voltage power line", which meant that no one was allowed to illegally tamper with them.

China's social security funds have been recently hit with scandals - in particular the Shanghai scandal wich involved 3.2 billion yuan of city funds - prompting the Ministry of Labour and Social Security to say that it would keep a closer watch on the funds. The Shanghai scandal which broke out in September brought down Chen Liangyu, secretary of the Shanghai Municipal Party Committee, and other senior officials and business leaders.

Xinhua reported that China has carried out five nationwide audits of social security funds since 1998. Embezzlement of the funds was found in 16 of the 31 provinces, autonomous regions and municipalities in 2004, while 1.7 billion yuan was misappropriated in 2005 alone.

The National Audit Office's report also revealed that the director and financial chief of a health insurance fund management centre in Ningxia Hui Autonomous Region, in northwestern China, transferred 31.9 million yuan (about four million U.S. dollars) of medical insurance premiums to the personal bank accounts of their friends and relatives. In Xinmi, Henan province, in central China, 6.4 million yuan of pension insurance funds were deposited in a credit cooperative, a kind of informal bank. The credit cooperative stopped operation in 2002 and the money could not be recovered.

China provided pensions to 43.67 million retired people last year and granted living subsidies to 3.62 million laid-off people. The value of the social security funds in China has more than doubled since 2000.





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