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Chinese Audit Reveals Embezzlement of Olympic Funds - 2004-06-24

A government audit has revealed that millions of dollars allocated for the 2008 Olympic games in China have been siphoned off by government officials for personal use. The news could tarnish Beijing's efforts to project a modern and business-friendly image. The money was allegedly stolen by officials at China's General Administration of Sports. The audit found that $16 million of Olympic Committee funds had been diverted, including nearly $13 million spent on private apartments for the administration's staff, and another $3 million illegally invested in various companies.

The audit was conducted by the National Audit Office, which presented its findings to the National People's Congress on Wednesday. In all, the auditor general said his office uncovered $170 million in funds misused from the national budget.

The news, first reported in the state-run media on Thursday, is an embarrassing revelation for the Olympic planners, who promised to keep preparations for the games corruption free.

The government says it will be investing more than $22 billion to prepare for the games. Analysts like Robert Broadfoot, manager of the Political and Risk Consultancy in Hong Kong, say China is counting on the 2008 summer games to improve its global prestige and boost foreign investment in the country.

"They are trying to turn the Olympics into China's coming-out party,? Mr. Broadfoot said. ?The Olympics is going to be a magnet for tourists that are going to be looking at how much Beijing has developed, it is a showcase."

The diversion of funds is another example of the corruption endemic in Chinese society since communist ideology began to be pushed aside in place of a free-market philosophy more than 25 years ago.

Economists have estimated China loses as much as 10 percent of its gross domestic product each year to corruption and graft.

The government has repeatedly assured foreign investors that it is taking the corruption problem seriously. In recent years many spectacular cases, often involving high-ranking officials and powerful businessmen have been exposed.

Mr. Broadfoot says the public disclosure of the embezzlement is an indication of how far Beijing is willing to go to improve its reputation.

"China these days is not willing to sweep everything under the carpet... What we are seeing now with this case is the government is going to make an example of how abuse is treated," he said.

Despite the scandal, Beijing celebrated international Olympic Day with songs and dances in the capital, and launched its second annual Olympic Cultural Festival.