China finds $900 mln in social security abuse

BEIJING, Nov 24 (Reuters) China's National Audit Office has determined that about 7.1 billion yuan (0 million) of social security funds have been misappropriated, the official Xinhua news agency reported late on Thursday.

The funds were siphoned off for overseas investment, commercial loans to companies, construction of government buildings and other purposes, Xinhua cited a report as saying.

About 2.3 billion yuan was embezzled before 1999 and 4.8 billion yuan after that, it said.

Since launching a probe in September into how the country's roughly two trillion yuan in social security funds is managed, the audit office has unearthed multiple cases of corruption and poor management.

Chinese Premier Wen Jiabao has called for illegal conduct in social security funds to be investigated and for those involved to be ''dealt with severely.'' The investigation was prompted by a snowballing scandal in Shanghai involving money reportedly drained from the city's 10 billion yuan social security fund for illicit loans and investments.

The Shanghai investigation has led to the dismissal of the city's Communist Party boss, Chen Liangyu, and the arrest of Zhang Rongkun, one of China's richest men.

In one case in the northwestern autonomous region of Ningxia, the director and financial chief at a centre that managed health insurance transferred some 32 million yuan of premiums into the personal bank accounts of friends and relatives, according to Xinhua.

On Wednesday, a government report said that widespread abuses in the country's social security funds had occurred but it did not give details.

Reuters SBA VP0555