Under-suspicion children's charity counters allegations with audit

A children's charity suspected of money laundering announced on Friday that it had provided a bank statement of its cash flow in 2011 to a third-party auditing agency, in the hope of clearing itself of public suspicion.

The results of the audit will be disclosed next week, according to a statement issued by the China Charities Aid Foundation for Children (CCAFC).

The controversy emerged after political pundit Zhou Xiaoyun posted the financial statement of the CCAFC onto Sina Weibo, China's Twitter-like microblog service, and raised suspicions it had engaged in money laundering.

Citing the CCAFC's 2011 financial statement, which he said he had acquired legally, Zhou questioned online the whereabouts of around 4.8 billion yuan listed as cash payments.

In response to the criticism, the CCAFC publicly apologized on Tuesday, attributing the disputed cash flow to an accounting mistake regarding other monetary assets, and uploaded a statement detailing the movement of other monetary assets on its official website as evidence.

Jiang Ying, a representative for the CCAFC, told Xinhua earlier this week that a serious accounting mistake was to blame for the controversy.

"Our financial staff mistakenly listed 4.75 billion in the foundation's aggregate accrual for short-term wealth management, but the amount should be 475 million," she said.

That inflated the figure under the item of other cash inflow and indirectly distorted the other cash payment, according to Jiang.

In its public apology, the foundation explained that purchases of short-term wealth management products from banks were "prudently made" to "increase revenue, reduce the proportion of operating outlays to donations and provide better assistance to the needy."

"These deals can be traced on the statement published on our website," said Jiang.

According to Jiang, the foundation channelled some 30 million yuan to short-term asset-management last year and earned nearly 1.08 million yuan.

However, the public seemed to be dissatisfied with the CCAFC's explanation, demanding verified bank statements.

A series of scandals have hit charity organizations in China in recent years, causing a public outcry for more transparency in China's charity work.

Most notably, the Red Cross Society of China (RCSC) came under fire in 2011 after a young woman calling herself "Guo Meimei" claimed in microblog posts that she worked for an organization under the RCSC and detailed her lavish lifestyle. That led some netizens to suspect she was embezzling funds.

Donations to the RCSC plummeted 59.39 percent year on year in 2011, according to official data.