Allegations the operator of Project Hope used millions of yuan in charity donations to make unauthorised investments have shocked private donors and Hong Kong delegates to the National People's Congress. The China Youth Development Foundation, the founder and manager of Project Hope, and legal representative Xu Yongguang have been in the hot seat since Hong Kong media accused the foundation of breaking laws which ban charities from using donations for speculative investments. Information and documents provided by former key staff allegedly show the foundation has directly invested donated money in dozens of projects which, in some cases, resulted in heavy financial losses. However, Mr Xu issued a statement on Thursday night denying any wrongdoing. He claimed the investments were only ever aimed at enhancing the value of the foundation's assets and were made in accordance with the law. Donors and legislators have urged Chinese authorities to investigate the case and have demanded a thorough audit of the foundation's assets. Sichuan High Court judge Luo Shuping said if the accusations were found to be true, the foundation would have committed a serious criminal offence. 'The money raised for Project Hope is to help children who dropped out of school,' said Judge Luo, who has sponsored three children over the years. 'The administrator of the fund has the obligation and responsibility to send the money into the hands of children. It has absolutely no right to use it for any other purpose,' he said. Under China's criminal law, such behaviour would result in charges of embezzlement of public funds, he said, which could lead to prison terms of five years to life. Project Hope's goal is to safeguard the educational rights of children in poor areas. It mobilises Chinese and foreign materials and financial resources to help bring dropouts back to school, improve educational facilities and to promote primary education in poverty-stricken areas. Ma Lik, a Hong Kong delegate to the NPC, said he and other Hong Kong delegates would raise the issue at the upcoming NPC meeting, which will convene in Beijing on Tuesday. 'We will ask [the foundation] to come over to clarify the accusations.' Mr Ma, who has also made donations to the project, said he was shocked to learn of the allegations. The China Charity Federation - one of the mainland's largest charity organisations - declined to comment on the Project Hope allegations. The Ministry of Civil Affairs, which governs charity foundations in China, will issue new regulations on the operation and administration of charity organisations. Current laws were too outdated, said an official. Mr Xu has cited these laws as legal support. 'We have been drafting a new regulation for more than a year and it should be released this year,' the official said.