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Three of China's top banks flunk audit

Three of China’s top banks flunk audit

(14 May 2013 – China) China’s National Audit Office (NAO) released results for three of the country’s state-owned banks and cited them for improper financial management. NAO said the banks were part of its audit of the financial accounting of 10 central state-owned enterprises (SOEs) and were found to have extended loans worth US$4 billion (A$4 billion) that broke rules and regulations.

Their violations included extending loans to unqualified projects and companies, breaching lending procedures and extending individual loans against the rules.

The banks were also found raising deposit rates against the rules, reporting false deposit volume and inflating capital assets.

Some US$81 million owed in taxes has been paid and US$101 million in losses recovered, NAO said. Problems found in the banks had been basically corrected in March 2012, it added.

The three state-owned banks are Agricultural Bank of China, China Construction Bank and Export-Import Bank of China. The first two are among the Big Four state-owned banks.

NAO said the companies have moved to address the problems.

By the end of March, the audited companies (including the other seven SOEs) had stipulated or improved 785 regulations, penalized 70 people found responsible for the problems and made a supplementary tax payment of US$86.6 million.

NAO audits the financial accounting of SOEs every year in an effort to discover existing problems and potential risks to maintain and increase the value of state assets.
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