China's National Audit Office (NAO) found that funds totaling 9.06 billion yuan (US$1.1 billion) had been misused in 38 government departments in 2004.
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The amount represents six percent of all the funds audited, NAO auditor-general Li Jinghua said in Beijing on Tuesday when delivering a report on the central budget in 2004, and auditing results work of other fiscal revenues and expenditures to the Standing Committee of the National People's Congress, China's top legislator.
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Auditors found that 12 departments obtained from the central government an additional 491 million yuan (59 million dollars) in budgeted funds through inappropriate means such as adding staff to payrolls, submitting proposals for non-existent projects, and randomly raising budget standards.
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Li said that 26 departments misappropriated funds totaling 1.07 billion yuan (US$129 million) and 14 others wrongly transferred funds totaling 935 million yuan (US$113 million) to their subordinate departments or other relevant organizations.
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Other malpractices, according to Li, included putting away funds in "small exchequers" and misusing funds earmarked for specific projects.
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Some government departments even diverted funds originally budgeted for special projects into building homes and offices for personal gain, he added.
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By August of last year, the State Reserves Administration had reserve materials totaling 1.4 billion yuan (US$169 million) that had been borrowed out before 1994 but not returned, according to the report.
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By the end of 2004, China had appropriated 266 million yuan (US$32 million) in reserve funds for the purchase of Chinese medicinal herbs, 227 million yuan (US$27 million) of which either went missing or was misappropriated.

(Xinhua News Agency June 29, 2005)