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The BBC's Duncan Hewitt in Beijing
"The Three Gorges has long been surrounded by allegations of corruption"
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Friday, 21 January, 2000, 14:45 GMT
China uncovers corruption rackets

China map


Details of two major corruption scandals - including one relating to the Three Gorges dam project on the Yangtze River - have been revealed by Chinese officials.

The National Audit Office (NAO) said officials had embezzled $600m of funds designated for people displaced by the Three Gorges project in the central Hubei province,

In the southern Chinese city of Xiamen, an investigation into corruption has led to the arrest of a number of senior officials in what is being described as the country's largest smuggling case.

Communist party links

There are reports that China's anti-corruption Central Commission for Discipline Inspection has been investigating the scandal in Xiamen for several months under an official news blackout.

The arrests included the city's deputy Communist party secretary, Liu Feng, and an arrest warrant has been issued for the city's deputy mayor, Lan Fu, who is believed to have fled abroad.

The local heads of two of China's major banks are also under investigation in the case thought to involve a massive illegal trade in oil, cars and other goods and to be worth hundreds of millions of dollars.

Cracking down on corruption

The revelations come almost a week after China's President, Jiang Zemin, called for a full-scale war against corruption in the Communist Party, which he said could threaten its survival.

The BBC's correspondent in Beijing, Duncan Hewitt, says analysts remain divided on whether such revelations will reassure members of the public that the Party is taking the problem seriously, or simply cause further alarm about the scale of corruption in the system.

News that around 12% of the entire budget to relocate 1.13 million people as part of the Three Gorges project has disappeared, will deal a further blow to China's attempt to build the world's biggest hydro-electric dam.

Controversial project

A spokeswoman for the NAO told Agence France Presse news agency that the embezzled money was used to construct buildings, set up companies and buy shares on the stock market.

The NAO also revealed that the ministry of water resources, which oversees the dam operation, "illegally raised" around $360m, which was later "misused".

The dam project has been surrounded in controversy since building began in 1993.

In 1998, officials acknowledged that corruption had affect parts of the project.

Critics of the dam say it will damage the environment and they have condemned the forced relocation of more than a million people.

The project has also run into financial difficulties Last year, authorities charged with managing construction of the dam said there was an almost $3bn shortfall in financing the next stage of the project.

Chairman Mao supported the idea of damming the Yangtze in the 1950s, but the real work started in the 1990s under the guidance of then Prime Minister Li Peng.

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See also:
16 Mar 99 |  Asia-Pacific
China dam faces cash flow crisis
08 Nov 97 |  World
Mao's dream of harnessing Yangtze nears realisation

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