New Three Gorges funds scandal

PUBLISHED : Saturday, 27 January, 2007, 12:00am
UPDATED : Saturday, 27 January, 2007, 12:00am

Audit reveals nearly 300 million yuan in money to move families was misappropriated

Beijing's efforts to improve accounting standards for the gigantic Three Gorges Dam project have suffered another setback with revelations that nearly 300 million yuan in relocation funding was misused between 2004 and 2005.

Quoting a newly released National Audit Office report, Xinhua reported on Thursday that the central government had granted 9.6 billion yuan between 2004 and 2005 to fund Three Gorges relocation programmes in Hubei and Chongqing , but 272 million yuan was misappropriated.

Financial irregularities ranged from inflated expenses to embezzlement by local government agencies. The audit covered 49 relocation programmes for local residents and 120 local companies forced to shut down and move out.

Highlighting the irregularities, the report said communication authorities in Yunyang county channelled more than 14 million yuan to non-relocation purposes such as office renovations and loan repayment.

In another instance, an agency under Zigui county received an extra 10.3 million yuan by inflating relocation costs. Xinhua said local police and prosecutors were working on five cases in which relocation funding was embezzled.

Tsinghua University professor Jia Xijin said authorities could claim credit for better management of Three Gorges relocation spending because the amount of misused funds was small compared to the scale of expenditure.

'However, the absolute value of the money that has been squandered is still huge, so the problems [with fund management] have yet to go away,' Professor Jia said.

She said misuse of relocation funding could come in different forms under various circumstances, 'but they share some striking similarities'.

'When it comes to the relocation budgets or funding distribution, it's the local government officials and not rule of law that gains the upper hand.'

To make way for the world's largest hydro-electric power project, the central government planned to relocate nearly 1.2 million residents in Sichuan , Chongqing and Hubei as rising waters gradually submerged their homes from June 2003.

The total spending for relocation programmes alone reached 51 billion yuan by the end of 2005 and will probably go up further, in part due to funding misuse.

During the past two years, the central government has beefed up its efforts to crack down on funding irregularities in key infrastructure constructions, including the Three Gorges Dam project.

Professor Jia said the central government also seemed more willing in recent years to share such audit information with the public.

'However, the government should give the wider community, including NGOs, more say in policymaking and supervision to safeguard the interests of communities that have been affected by the relocation programmes,' she said.