Audit finds extensive fraud of poverty fund

China's top auditing body has reported that over 21.5 million yuan ($3.54 million) in funds intended for poverty alleviation has been defrauded in 17 counties, according to an audit reported released on Saturday.

The National Audit Office (NAO) on Saturday announced the results of an audit carried out across 19 counties in Guangxi Zhuang and Ningxia Hui autonomous regions and Yunnan, Guizhou, Shaanxi and Gansu provinces in April and May, which targeted funds appropriated to these disadvantaged counties from 2010 to 2012.

None of the 19 counties were found to have used the funds properly. Eleven counties were found to have embezzled the funds and nearly 11.1 million yuan was misused for dining, giving gifts and travelling in 10 of them. Seventeen of them defrauded the fund by applying for fake programs or private benefits.

Funing county in Yunnan has left 55.98 million yuan funds unused for a long time and Xihe county in Gansu took 12.5 million yuan from the fund, the auditing results showed.

Punishments have been meted out to 123 people associated with the violations as of October, the NAO said on its website Saturday.

The number of rural poor in China dropped by nearly 67 million from 2010 to 2012, according to a State Council report Wednesday.

China has made great efforts in combating poverty through the relief program, Du Xiaoshan, a professor and economist at the Rural Development Institute of the Chinese Academy of Social Sciences, said, "yet the efficiency of the fund management should be improved."

China began nationwide poverty relief programs in 1986, by setting the poverty line and designating "key poverty counties," which are given special poverty-alleviation funding and enjoy favorable policies in aspects including finance, education and medical care.

To decide at the national level which counties are impoverished, the central government considers factors such as population living below the poverty line, per capita net income, per capita GDP and government revenue.

China set the per capita annual net income of 2,300 yuan as the new rural poverty threshold in 2011, and an updated list of national-level poverty-stricken counties released in 2012 with 592 counties as being severely destitute.

Although some counties have realized economic growth, they have been reluctant to remove the title of "key poverty county" for fear of losing those favorable policies and funds, Zhu Lijia, professor with the Chinese Academy of Governance told the Beijing Times on Sunday,

He added that the funding could sometimes possess over half of the fiscal revenue.

Some counties fought to be the poverty-stricken county as it can get money more quickly than earning by themselves, Zhu said.