FLOOD FUNDS DIVERTED

MAINLAND authorities have confiscated a 170 million yuan (HK$158 million) commercial building in Beijing built by the Ministry of Water Resources from funds that should have been used for flood prevention.

Construction of the 28-storey building was halted when the scandal was uncovered last year. It would be sold at auction under orders from the State Council, or cabinet, according to Wenhui Daily. The Ministry of Water Resources had designed the building in the western outskirts for offices, a hotel and conference centre as well as restaurants.

The modern tower was built with misappropriated funds from the ministry and 11 of its regional offices or affiliated companies. The scam was uncovered in a review by the National Audit Office after the devastating floods along the Yangtze River and in northeast provinces in summer 1998.

The ministry also used its own 'little treasury', or funds kept on separate accounts, to buy property, cars and lend funds to Hong Kong construction companies. More money is reported to have disappeared from the ministry's budget last year - after the audit started.