The Ministry of Labour and Social Security on Friday ordered its local
branches to establish a rapid reporting system to ensure the safety of social
The move comes in the wake of a series of fund scandals.
Labour and social security bureaus at all levels should report any
misappropriation or fraud involving the funds as soon as they are detected,
according to the order.
Cases involving less than 500,000 yuan (US$62,500) should be reported to
provincial level supervision organizations, while those involving more than
500,000 yuan should be reported to the ministry.
Officials heading the local supervision branches who turn a blind eye or
delay, hide or lie in the reporting process will be reprimanded, given
administrative punishment or even turned over to judicial organs.
A National Audit Office report published last month said that around 7.1
billion yuan (US$900 million) of the country's 2 trillion yuan of social
security funds have been misappropriated.
Speaking at a meeting with more than 130 local labour and social security
officials from around the country, Vice-Minister Liu Yongfu ordered local
officials to redress these problems and trace and recover misappropriated funds.
The incomplete supervision system and lax regulation enforcement have led to
frequent violations, Liu said.
"The disorderly management in some places has left loopholes for criminals
and inflicted huge losses," he said.
Despite a spate of scandals that have shocked the country, Liu insisted that
the country's social security fund safety is improving and the trend of mass
misappropriation has been curbed.
Liu ordered local officials to address their problems, and recover and repay
funds within a set time. Those who are found responsible will be severely
punished. Local governments will have to reimburse funds that cannot be
Liu instructed local labour and social security officials to submit their
rectification plan by the end of the year and conduct a self-inspection before a
thorough audit by the National Audit Office next year.
Liu said that an information release system would be gradually set up
starting from next year. Labour and social security bureaus at all levels would
release information on collection, management, use and operation of social
security funds on a regular basis.
By the end of next year, the management and operation of company pensions
will be gradually shifted to independent organizations, Liu said.
Cui Huilie, supervision director of the ministry dispatched by the Central
Discipline Inspection Commission, said that though the overall situation of fund
management is good, misappropriation and violation of regulations are still
rampant in some places.
"Most notably the scandal in Shanghai exposed the problems and weaknesses in
current fund management and supervision," Cui said.
Dozens of city officials and business people, including Chen Liangyu, Party
secretary of Shanghai, have been sacked and put under investigation due to
alleged involvement in a multi-billion yuan fraud.