Irregularities amounting to more than $5 billion have been found at China's sovereign wealth fund and two large state-owned banks, according to the state auditor, offering a glimpse into the opaque management of government-controlled firms.
China Investment Corporation (CIC), Bank of China and Agricultural Development Bank of China violated regulations in areas including asset selling, loan issuance and fraudulent invoicing, according to the National Audit Office (NAO).
"The audit found CIC breached rules on overseas investment and risk control, domestic subsidiaries operation and financial management," the NAO said in a statement.
The fund's "financial management was relatively weak", it said in the document, published late Wednesday.
CIC was established in 2007 to pursue higher returns from part of the country's foreign exchange reserves, the world's largest, and had assets of more than $575 billion at the end of 2012. One of its subsidiaries sold stakes in a securities firm in 2011 at their original purchase price, losing 1.26 billion yuan ($202 million) on their market value at the time, the NAO said in the statement.
Another CIC subsidiary made unauthorised investments in property developments totalling more than 8.2 billion yuan by March last year, the NAO said.
In 2012, CIC paid out nearly $9 million in commissions to brokers without evidence of any actual business being carried out or proper approval, it said.
CIC vowed Thursday to address the problems. "The senior management of CIC pays intense attention to the auditing and has... drafted a rectification plan," it said in a statement emailed to AFP. "(We) will rectify (the problems) one by one."
The NAO said in two other statements Wednesday that Bank of China (BOC) and Agricultural Development Bank of China (ADBC) both breached regulations in granting loans and balance management.
BOC issued illicit bankers' acceptance bills and letters of credit worth more than 3.2 billion yuan from 2009, NAO said.
ADBC issued loans of more than 6.7 billion yuan inappropriately between 2006 and the audit, which took place in May-August last year, it said. For BOC the figure was 6.4 billion yuan from 2004.
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