Boss of charity 'admits to spreading deficits'
The chief of the China Youth Development Foundation, which runs the Project Hope charity, has admitted deficits in loss-making ventures were spread to profit-making units to cover up unauthorised investments, a mainland report said yesterday.
Xu Yongguang, the foundation's founder and legal representative, admitted the charity had spread the deficit from several money-losing projects to other investments that were performing better, the Sanlian Shenghuo magazine reported.
Mr Xu claimed the financial arrangement was legal 'so long as there is no embezzlement', the report said.
The weekly, however, cited a financial expert as saying that to spread losses from one investment to others was not in line with standard financial practice.
In the cover story, Mr Xu also said the foundation had, before 1993, used about five per cent of donations to cover operating costs, which is higher than the legitimate expenditure which amounts to about 2.9 per cent of donations.
Mr Xu stressed that the five per cent ceiling was endorsed by the Communist Youth League, which oversees the foundation, but the State Administration of Auditing in 1993 informed the foundation that this violated a State Council regulation on management of the foundation, the report said.
Mr Xu said the foundation had to engage in some investment to make it 'a sustainable asset'.
Since 1991, the foundation had accumulated a deficit of 18 million yuan (HK$16.92 million), the report said.
'Profit-making should not be the goal of the charity, this is a very basic concept,' Professor Mao Shoulong, of the Beijing-based People's University, was quoted by the report as saying.
Project Hope, which is one of the mainland's biggest charities and specialises in providing education to children of poverty-stricken families, was accused by former staff members last month of misappropriating millions of yuan in donations to make unauthorised investments. The foundation has denied any wrongdoing.
It was under the spotlight again later last month after propaganda authorities ordered the Guangzhou-based Southern Weekend not to print a cover story on the foundation's alleged financial irregularities.
The Sanlian Shenghuo report was the first carried by a mainland publication on the foundation since the ban last month.