Crackdown on hidden reserves

PUBLISHED : Friday, 12 June, 2009, 12:00am
UPDATED : Friday, 12 June, 2009, 12:00am

The central government has launched a campaign to clamp down on the persistent problem of unauthorised reserves, or off-balance-sheet accounts, in government-funded social organisations and state enterprises.

A directive jointly issued by the Office of the Central Committee of the Communist Party and the General Office of the State Council ordered a nationwide crackdown on unauthorised reserves, referring to money set aside by government departments, government-sponsored social groups or state enterprises that do not appear on the official balance sheet. These 'private coffers', or xiaojinku, have long been a hotbed for corruption. It is an open secret that many local officials have taken a portion of state funds earmarked for their organisations and enterprises and put them in their own private coffers.

The mainland has long kept a cap on the growth of genuine non-governmental organisations, but sponsored a large number of government-backed organisations to provide services to different social groups, such as the disabled, elderly and youngsters.

The directive described these unauthorised accounts as 'tumours' of the state and vowed to eliminate them. The directive said a priority of the crackdown would be social organisations fully funded by the government and the probe would gradually be expanded to other government-backed social groups, state enterprises and other companies with the state as their major shareholders.

The crackdown is part of a four-year anti-corruption campaign which would last until 2012, Xinhua quoted the directive as saying yesterday. It also pledged to put in place a long-term mechanism to curb these unauthorised reserves.

The directive said crackdowns would be carried out in four phases - including planning, 'self-inspection', and auditing based on public complaints and tip-offs. The last phase of work would include recovery of funds, removal of loopholes and strengthening of supervision.

Apart from cash deposits, the crackdown would also include company shares and other financial assets which are not recorded in balance sheets.

The directive said it would 'encourage self inspection' and treat government units leniently if they turned themselves in.

It also vowed to punish cadres who tried to cover up and eliminate evidence, and cadres who had set up large private coffers could face prosecution.