Audit office finds flaws at 13 big state firms

China Mobile, China Construction Bank, Agricultural Bank of China and 10 other big state-owned firms have been accused by the National Audit Office of various management and accounting irregularities and failure to implement government policies.

The audit office yesterday published on its website the audit reports on the 13 firms' financial results for 2011, highlighting the problems it found in them.

In the report on China Mobile, it said 10 of the company's subsidiaries inflated their sales revenues and operation costs by as much as 274 million yuan (HK$343.7 million) during 2005 and 2011.

In addition, the company's branches in Guangdong and Hebei provinces and two research units bought more than 450 million yuan of commercial life insurance for their employees, which was not allowed.

The report also said the company especially arranged for its Hong Kong-listed unit to operate "profitable" investment projects since 2005, while it took over loss-making projects.

Construction Bank and Agricultural Bank were found to have failed to follow internal rules and processes when granting credits to enterprises and investment projects. Such loans totalled 6.8 billion yuan and 9.8 billion yuan, respectively.