Military, Communists Escape China's Graft Crackdown

Annual reports from "Iron Face" Li Jinhua, the head of China's National Audit Office, paint a scathing picture of endemic, high-level graft and corruption. Dozens of cabinet ministry officials have already been sacked or jailed as a result — all unimaginable just a few years ago. But despite the popularity and attention the whistleblowing has earned him, Li's power is limited because the military and Communist Party leadership are beyond the grasp of his bean-counting legions.

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Back home in China, there's plenty to distract President Hu from international concerns, especially battling corruption. In recent years, China's leaders have hired 80,000 government auditors to uncover graft. NPR's Anthony Kuhn reports from Beijing on the auditor general as graft busting folk hero.

ANTHONY KUHN reporting:

China's state media have lionized Auditor General Li Jinhua, dubbing him Iron Face Li. This image was reinforced by last year's national audit of the previous year's budget, which found few clean hands at the 32 cabinet ministries and departments it examined.

This year's audit promises to be just as damning. In the first eleven months of last year auditors uncovered $36 billion dollars in financial irregularities and handed over more than 1,000 cases to judicial authorities for criminal investigation. In person, 62-year-old Li is unassuming and matter-of-fact as he explains what his audits have uncovered.

Mr. LI JINHUA (China's Auditor General): (Through Translator) General rules have been established but people aren't strictly following them. Even worse, there's a lot of diversion of public funds. Money earmarked for special purposes is spent on other things. Also, some people exploit loopholes in our policies and management to swindle the state out of money.

KUHN: Auditors found, for example, that the Health Ministry had withheld funds that were supposed to be used to prevent epidemics. The Police Ministry illegally doled out loans to companies. State hospitals overcharged patients and took kickbacks from drug companies, and 12 government agencies padded their payrolls with fake employees.

Since the auditor general began publishing reports three years ago, citizens have been disgusted by the sleaze but encouraged by the light the auditors have thrown on it.

Retired worker Chencho On(ph) is walking his dog in East Beijing. He says he doesn't know who Li Jinhua is but he approves of what the auditors are doing.

Mr. CHENCHO ON (Beijing Resident): (Through Translator) There are few people in country's leadership who break the law. They ought to strengthen the auditing department and get a grip on this problem. Since 2003, we've begun to see some transparency.

KUHN: Auditor General Li says he is angry about the graft too, but he's optimistic in the long run.

Mr. LI: (Through Translator) Of course I'm angry sometimes. That's one side of it. This is the people's money, after all. I feel indignant when a few people divert or waste it. But from another angle, it may be unavoidable at this stage. All countries have gone through this phase in their development.

KUHN: China is the midst of a building boom and Li says waste is as big a problem as embezzlement. From city squares to expressways and parks, China is full of expensive boondoggles that help officials get promoted but that the local economy may not need.

Mr. LI: (Through Translator) In the past we've audited more than 20 airports. We discovered that many of them lost money. There was no problem in their budgetary procedures. There was no corruption or diversion of funds. But they were poorly planned and failed to get the desired results.

KUHN: In future, Li says, audits will look harder at the cost effectiveness of projects.

This year, the National Audit Office is going to turn its attention to massive projects, including this one, the 2008 Beijing Olympics. Here at the site of the future Olympic Village, massive trains are towering over the frameworks of the new national stadium and swimming center. A nonstop procession of dump trucks and cement mixers is coming in and out of the site.

Beijing is planning to spend around $40 billion dollars on the Olympics in the next two years and the auditors are going to be watching exactly where that money goes. The auditors looked at the National Sports Administration in 2004 and they found that it had embezzled millions of dollars earmarked for the 2008 Olympics and used it to build apartments for the administration's employees. Li Jinhua says there are no plans for now to extend his audits up the political hierarchy. That leaves a big gap at the top as audits don't extend to officials above the rank of cabinet minister, much less President Hu Jintao.

As for the Communist Party, which stands above the government, auditors scrutinize its use of state funds but they don't publicize the reports. After all, China has had auditors since the Sung Dynasty over one thousand years ago. They never audited the Emperor. China has had a civil service of bureaucrats since the Han Dynasty more than two thousand years ago. And they have long been used to treating state coffers as their personal piggy banks. Anthony Kuhn, NPR News, Beijing.

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