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China to audit 9 giant SOEs
By Chen Gang (Xinhua)
Updated: 2004-05-04 21:31

China's National Audit Office will begin its new round of audit work on nine super-scale SOEs involving 1.8 trillion yuan (US$216.9 billion) as well as the State Tobacco Monopoly Administration.

The office has gained respect for its recent announcement on accounting irregularities of giant State-owned enterprises (SOEs), including the China Life Insurance Company,

China Life Insurance Co., Ltd., which was listed on the New York and Hong Kong stock markets last December with a US$3.4 billion Initial public offering (IPO), was hit by falling share prices and questions after China's National Audit Office announced on February 4 the accounting irregularities of its parent company, involving 5.4 billion yuan (US$652 million) during a routine audit.

From June this year, the National Audit Office will audit the China National Petrochemical Corporation, China National Offshore Oil Corporation, China Electronics Science and Technology Corporation, China Netcom Corporation and five other SOEs.

The audit work will mainly be focused on economic activities and financial balancing of these SOEs in year 2003, and the pre-audit investigation has already started, according to the National Audit Office.

"This audit will not be a routine one, but a special task entrusted by the Organization Department of CPC (Communist Party of China) Central Committee, which is in charge of major leaders of those SOEs," said an official with the National Audit Office.

However, this audit is not the first one of its kind, since 22 SOEs have been audited by the National Audit Office according to a relevant regulation issued by the State Council in 1999.

About 500 people will participate in the audit work, and special reports will be submitted to the State Council upon conclusion of the audit work, the official said.

This new round of large-scale audit work, to be the most strict one than ever, marks a progress and brings benefits to SOEs, said an audit expert recently.

The China National Petrochemical Corporation and some other SOEs have revealed the unprecedented strictness. "During previous audits, we will be informed in advance of names of affiliated enterprises that will be checked, but this time, it is still a secret even when the investigation has begun."

Although some SOEs have said that no irregularities will be found in the upcoming audit, it is still too early to make such optimistic conclusions.

The China National Offshore Oil Corporation, which has shares traded in the Hong Kong stock market, was recently suspected for infringing upon finance regulations in Hong Kong.

The spokesman with the Hong Kong stock exchange announced in April that it was investigating the fund transfer of 6.8 billion yuan from the listed company to a financial company controlled by the parent company, and the share price of China Offshore Oil plummeted soon after the announcement.

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