China Cracks Down on "Small Gold Mines"

Published: 2009-05-13

Cover News, page 17, Issue 418, May 11
Translated by Liu Peng
Original article: [Chinese]

China recently launched a campaign to crack down on "small gold mines" - that is, secret slush funds containing public money that has been siphoned off by government organs and other public institutions.

The exact number and size of these illegal accounts remains a mystery. Sun Baohou, Auditor-in-Chief at the National Audit Office (NAO) once remarked that it's almost impossible to know just how many exist in China.

However, he went on to estimate that government organs and public institutions might lock away 82.7 billion yuan in secret accounts every year.

Others speculated that the figure may be as high as 500 billion yuan a year, which corresponds to about 5% of national gross domestic product (GDP).

From 1998 to 2006, the NAO unearthed 140.6 billion yuan stored in illegal slush funds.

A directive on regulating and inspecting these slush funds was jointly issued by the Central Commission for Discipline Inspection of the Communist Party of China, the Ministry of Supervision, the Ministry of Finance and the NAO in late April.

This is the twelfth time since the 1980's that China has launched a crackdown on slush funds. The campaign is expected to last for 8 months.

The directive offers whistle-blowers a reward of up to 100,000 yuan for information leading to the uncovering of secret accounts containing embezzled money.

The Economic Observer learned that the State Administration of Forestry began an internal investigation of its accounts on May 11.

However, some still doubted the efficacy of the project, observing that central authorities lacked the resources required to do a full audit and therefore most administrative units would only be asked to report on themselves.