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Last Updated: Thursday, 24 June, 2004, 07:02 GMT 08:02 UK
China uncovers Olympic corruption
The Athens 2004 Olympic flame being carried through Beijing
Beijing hopes for Olympic glory, not embarrassment
China's auditor general has found that money for Olympic projects has been siphoned off from China's 2003 budget, the state-run media reported.

Auditor General Li Jinhua's report also uncovered widespread embezzlement by officials of poverty relief funds intended to aid farmers.

He also catalogued inefficiency in constructing infrastructure projects, and tax evasion by state enterprises.

Altogether, Mr Li's report found 1.4bn yuan ($170m; 93.7m) missing.

It said China's tax revenues rose 14.9% in 2003 to a record $242bn.

Olympic committee sweats

Mr Li's report, which was delivered to the Standing Committee of the National People's Congress, found malpractices at the majority of departments it investigated - 41 out of 55, the China Daily newspaper reported.

"Most of the money...has gone into the hands of staff members or to office building construction," China Daily's report said.

Since 1999, the General Administration of Sports has appropriated 131m yuan ($13.2m) earmarked for the Beijing 2008 Olympics organising committee.

The bulk of this - 109m yuan - was spent on building homes for the organising committee's staff, the auditor general's report found.

Farmers suffer

It also uncovered evidence of sweeping corruption in rural areas, where money to provide cheap loans to farmers was diverted to pay for traffic, electricity and telecoms projects.

Premier Wen Jiabao made tackling rural poverty the theme of his speech to the March 2004 meeting of China's parliament, the NPC, saying making farmers better off was a national priority.

A farmer uses a horse drawn plough in North China
Farmers are missing out on China's boom times

In Chongqing, southwest China, only 0.3% of total poverty relief funds ended up in the hands of farmers, the auditor's report has found.

Nor were farmers adequately compensated for sales of land use rights by 10 cities. In particular, it criticised the appropriation of farm land for golf courses on the outskirts of Beijing.

The report also found wasteful spending on infrastructure projects, saying 25% of 526 projects studied were not completed on time.

Another 119 were completed but "could not be put into full operation".

It singled out a gas works in Henan province which took over a decade to build and is losing money because of changes in the gas market since it was devised.

Tax evasion was another problem. The audit office scrutinised 788 enterprises which between them avoided paying more than 25bn yuan in taxes.

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