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Officials punished for misuse of funds

By Wang Zhuoqiong (China Daily)
Updated: 2009-10-16 08:10

A total of 135 officials have violated laws or Party discipline in handling the country's economic stimulus projects, as teams were dispatched to supervise the allocation of matching funds from local governments and oversee the flow of the stimulus money.

Among the 135, six violated laws and have been handed over to the prosecutors, according to a statement issued by the Communist Party of China's Central Commission for Discipline Inspection.

The others received administrative or disciplinary punishment, it said.

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In a major case listed in the statement, Lan Shaowei, deputy head of Hanyuan county in Sichuan province, took bribes totaling $85,700 from bidders for a reservoir project.

He was expelled from the Party and sentenced to 12 years in prison.

The commission pledged to closely supervise the projects involving huge government investment and punish rule breakers.

Inspection teams, that include officials from the commission, the National Development and Reform Commission and the Ministry of Finance, focus on projects with large investments and those closely related to public interests. They check investment plans and management, supervise bidding and application processes and review outcomes, the 21st Century Business Herald reported.

The key of the mission is to oversee the projects funded by the central government, as well as the matching funds from local governments. They also will find problematic projects and reform them.

Local capital urged

On Tuesday, the Ministry of Finance for the first time issued a circular, allowing local governments to use the proceeds of land sales to bankroll the stimulus projects.

In the circular, the ministry, for the third time in a month, urged local governments to secure funds needed for the stimulus package.

Last year, China announced an economic stimulus package worth 4 trillion yuan ($586 billion), part of which is expected to come from local governments.

But many local governments are finding it difficult to secure needed funds due to the economic slowdown.

Since the stimulus plan was announced last November, the central government has allocated funds in four batches - 100 billion yuan, 130 billion yuan, 70 billion yuan and 80 billion yuan.

It will issue the fifth batch of funds this month to bring the total to 550 billion yuan.

And local governments are required to provide 1.18 trillion yuan for stimulus projects by the end of this month.

Su Ming, deputy director of the Research Institute for Fiscal Science, told the 21st Century Business Herald that it is unknown if proceeds from the land deals can solve the cash shortage of local governments.

In 2007, local governments reaped only 400 billion yuan in net profits from land sales.

Worse still, not all of the money can be spent on stimulus projects, analysts said.

In Yunnan province, for example, only 40 percent of its 1.6 billion yuan in net profits from land sales last year could be spent on urban planning and construction. Other parts of the money go to fields including land resources management, welfare housing and farmers' pension fund.

Therefore, land proceeds can only solve the problem temporarily, analysts said.

Xinhua contributed to the story