Billions in irregularities, fake receipts found in China road projects: auditor

Auditor uncovers illegal tendering processes, fake receipts and use of subcontractors

PUBLISHED : Tuesday, 28 May, 2013, 12:00am
UPDATED : Tuesday, 28 May, 2013, 3:14am

Irregularities involving billions of yuan have been uncovered in five mainland expressway construction projects.

The construction of a 3,017-kilometre expressway linking Baotou, Inner Mongolia, with Maoming, Guangdong province, included an 85.6km stretch that had a budget of 7.7 billion yuan (HK$9.8 billion), according to the National Audit Office.

Its cost had ballooned to 10.85 billion yuan by completion.

The budget overrun was mainly due to inadequate design of bridges and tunnels, as well as the construction of property projects which exceeded estimates, said the audit office.

Six companies were found to have illegally subcontracted out projects worth 262 million yuan.

For the expressway encircling Guangzhou, the capital of Guangdong, 31 companies exceeded their budgets by a total of 66.35 million yuan, while 253 million yuan of contracts were awarded to 62 power, telecommunication and technology companies without public tender.

"The Guangzhou ring road contained problems including project cost overruns, improper tendering and illegal subcontracting," said the watchdog, noting that a 117 million yuan contract was awarded to an unqualified steel company from Hunan.

For a 348km expressway from Changchun, the capital of Jilin province, to Hunchun, a city near the North Korean border, 166 contracts worth 2.05 billion yuan were awarded without a public tender as required by Chinese law, while 10 companies illegally subcontracted 850 million yuan of projects.

For a 70.6km section of the expressway from Chongqing to Changsha, the capital of Hunan province, the final construction cost exceeded the originally budget of 5.66 billion yuan by 1.14 billion yuan.

The reasons for the cost overrun included increased compensation for land acquisition and higher raw material prices. In addition, 12 companies issued 78.2 million yuan of fake receipts. Construction on the 70.6km section of the expressway began in April 2006, one year before Ministry of Transport approval was obtained.

Twelve companies were found to have illegally subcontracted 482 million yuan of work for a 1,517km expressway from Fujian to Nanning.