By staff reporter Zhang Na

The National Audit Office, China’s auditing watchdog, found misconduct in 17 railway bureaus and three transportation companies affiliated with the Ministry of Railway. The violationary practices have involved 5.38 billion yuan in the past year.

For the past decade, local railway departments have set up auxiliary, for-profit enterprises outside the scope of their regular business, according to the auditor’s report. These supplementary enterprises include storage, construction, real estate, transportation agents and others.

The expert told Caijng that these for-profit businesses have long ensnared assets, management and personnel from China’s rail industry. “Many officials from railway departments take nominal positions in affiliated enterprises and earn wages,” said the expert.

The audit also noted that some enterprises are counting on their relation with rail departments to gain a business advantage.

Enterprises with auxiliary businesses have become a major source of revenue for China’s railway system. In 2007, the combined assets of enterprises under the railway departments were 89.2 billion yuan. In the same year, these businesses posted 130 billion yuan in revenue, which accounted for 39 percent of the overall revenue of China’s railway transportation industry.

The auditor also found accounting flaws in the 2006 financial results of the subsidiary units of the Ministry of Railway, with profits of 1.1 billion yuan more than reported. 

Caijing learned that 167 officials have been punished due to the audit.

1 yuan = 14 U.S. cents