A review of economic reports from the past two years has revealed officials in eastern Yunnan's Luliang County (陆良县) systematically inflated economic figures to the tune of hundreds of millions of yuan. The audit, conducted by the National Bureau of Statistics (NBS), was made public by news service Xinhua on September 5.
Inspectors looking into financial records regarding the county's "industrial output value" discovered data for 28 companies had been faked in 2012. So far this year figures for 25 companies have been found to be erroneous.
In total, Luliang accounts claimed a combined 9.08 billion yuan (US$1.48 billion) in industrial output for the two years in question. National auditors were only able to verify receipts of 3.88 billion yuan (US$634 million), leaving an unaccounted for total of 5.2 billion yuan (US$850 million) — a 57 percent exaggeration of actual figures.
The motivation for such large-scale fraud was not mentioned in the Xinhua article. However, a more detailed English-language version of the original report offers some conjecture:
Companies complained that if they did not fraudulently report higher data, their reports would be returned by local government departments. They also said that fake reports would ensure they would enjoy favorable policies such as securing bank loans...It is a well-known fact that local government leaders are assessed for their performances based on economic data. Nice-looking data sheets mean promotion opportunities.
The Luliang audit is part of an ongoing review of provincial and municipal economic data undertaken by the NBS and the National Audit Office. The ostensible purpose of the nationwide evaluation is to uncover fraud such as that found in Luliang and create a more transparent government.
The administration of president Xi Jinping has stressed limiting government spending, rooting out corruption and increasing accountability since coming to power last year. Luliang's gigantic financial irregularities represent the first reported instance of corruption uncovered in Yunnan by the audit.
Whether the faked data exposed recently is a province-wide problem remains unclear, as does what sort of punishment county authorities could face. As of this writing, no Luliang officials have been named publicly in connection with the fraud.
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