Government report targets fund abuses

Updated: 2006-11-22 21:00

BEIJING - An audit of social security funds across China turned up widespread abuses, a government report said on Wednesday, amid an ongoing probe in Shanghai that has ensnared top officials in the financial capital.

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A cabinet meeting chaired by Premier Wen Jiabao called for illegal conduct in the funds to be investigated and for those involved to be "dealt with severely", according to a report of the meeting on the government's Web site (

"In some places, government policies are not being strictly implemented, management is not standardised and there are even problems of embezzlement and misappropriation of funds," the report said.

"Some problems are relatively serious and require high-level attention."

The report, however, did not disclose any specific examples or details of abuses.

The audit of pension, unemployment and health insurance funds in provinces across China was prompted by the snowballing scandal in Shanghai that has led to the dismissal of the city's Party boss, Chen Liangyu, and the arrest of Zhang Rongkun, one of China's richest men.

The central government has dispatched more than 100 investigators to Shanghai to investigate money reportedly drained from the city's 10 billion yuan ($1.25 billion) social security fund for illicit loans and investments.

A social welfare system was an important part of building a "harmonious society", the report said, echoing what is meant to address official abuses and the growing gap between rich and poor.

Local governments should rectify problems that the audit turned up, losses due to abuse of the funds should be compensated and those responsible should be "seriously dealt with", the report said.

It also called for greater transparency in the management of social security funds.

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