Children's charity refutes money laundering suspicions

A children's charity suspected of laundering money announced on Thursday that the results of a third-party auditing agency have cleared the suspicions, blaming a serious accounting mistake for the controversy.

Based on auditing results and relevant laws and regulations, "The China Charities Aid Foundation for Children (CCAFC) did not conduct money laundering activities involving 4.8 billion yuan (about 770 U.S. dollars) in 2011," said Cao Fengliang, chief public accountant of Beijing Zhonglicheng Certified Public Accountants Co., Ltd., on Thursday.

Instead of being automatically generated by finance software, data regarding CCAFC's cash flow statement was manually filled in, according to Cao.

"Finance staffers mistakenly listed 4.75 billion yuan in the foundation's cash flow statement, when the amount should have been 475 million yuan," he said.

CCAFC's deputy secretary-general Wang Lin said the foundation has worked out measures to rectify its financial system.

Wang said the CCAFC will set up a special committee to invite charity experts to supervise its work, as well as designate a day to open the foundation to the public.

Beijing Zhongzheng Tiantong Certified Public Accountants, a company responsible for auditing the CCAFC's finances in 2011, on Thursday admitted in a statement that it failed to detect the mistake and apologized for its negligence.

The controversy emerged after political pundit Zhou Xiaoyun posted the group's financial statement on Sina Weibo, a popular microblogging website, raising suspicions that it had engaged in money laundering.

Citing the financial statement, which he said he had acquired legally, Zhou questioned the whereabouts of 4.8 billion yuan listed as cash payments.

His claims immediately drew public attention, with many voicing their anger and asking the organization to explain the situation.

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

The Red Cross Society of China (RCSC) came under fire in 2011 after a young woman calling herself "Guo Meimei" who claimed to work for an organization under the RCSC posted microblog entries detailing her lavish lifestyle, leading some netizens to suspect that she had embezzled funds from the organization.

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