A woman renowned nationwide for her work in caring for orphans has been accused by American donors of embezzling hundreds of thousands of yuan.
A civil action against Hu Manli was begun earlier this year by the New Jersey-based United Moms Charity Association, the main backer of the orphanage in Yunnan.
Proceedings started at the Lijiang Intermediate Court in June but only came to light this month with a report in Guangdong's Southern Weekend.
The report coincided with extensive media coverage for a visit to Shenzhen by 41 children from the Yunnan Lijiang Ethnic Orphanage. Despite the reported allegations of embezzlement, the orphans all secured financial pledges from Shenzhen residents amounting to 3,000 yuan (HK$2,830) for each child. Such has been the goodwill surrounding the work of Ms Hu that a further 47 children back at the Lijiang orphanage also secured funding from Shenzhen sponsors.
Ms Hu became a media figure when she began adopting orphans 12 years ago.
The Lijiang orphanage, taking in ethnic minorities, houses 308 children.
In April, two months before the accusations were levelled by the association, she was lauded on Chinese Central TV. She even inspired an opera performed in Shanghai and Beijing in the mid-90s. The media also reported her battle with the Government against prejudice and red tape and the sacrifice of her own health and family life for the orphanage after her divorce.
The Southern Weekend claims Ms Hu had abused her position in control of donations.
The paper claimed she inflated the cost of items bought with donated funds, covering purchases such as blankets and food.
It cited a case in which Ms Hu allegedly told US donors it cost 30,000 yuan to send 36 orphans to a trade school, when the real cost was 7,500 yuan.
The report said Ms Hu abandoned a number of ill or retarded children by leaving them outside government-run welfare homes. Many of the claims, if found true by the court, could lead to a criminal investigation into Ms Hu.
The paper said it began its investigations in response to an e-mail about the orphanage in June.
Southern Weekend reporter Zhen Qian talked to Ms Hu's former driver, former colleagues, adopted children and donors from across the mainland and the US.
Zhang Chunhua, director of the United Moms Charity Association, said the group had given 2.87 million yuan from August 1999 to April last year.
According to Ms Zhang, at least one million yuan might have been used inappropriately, the report said.
She said the group took Ms Hu to court to force her to reveal the finances of the orphanage. Ms Hu had repeatedly refused to do so, Ms Zhang said. 'So far the court and the Government have been very supportive and the situation is favourable to us,' she said.
China has no laws governing non-government charity groups - an emerging field in China. Ms Zhang believes this is one of the main reasons for the financial irregularities.
'If the Government does not draft rules and regulations in this regard, there will be more abuses,' she said.
If Ms Hu loses in the Lijiang Intermediate Court, she will have to open the books of the orphanage. She has refused to comment on the newspaper reports.