The Red Cross Society of China (RCSC) has decided to shut down one of its fund-raising groups due to serious management flaws, as the group's alleged misuse of donations sparked public mistrust in charities.

The China Business System Red Cross Society has been repealed for failing to establish a sound internal management system, maintaining a benefit-based relationship with a consulting company, and committing violations in financial and legal management, an investigation report said Saturday.

The China Business System Red Cross Society, a group founded in 2001 by the China General Chamber of Commerce (CGCC) with the approval of the RCSC, engaged in charity fund raising in the commercial sector. Funds raised by the group are channeled directly to the RCSC.

The group faced accusations earlier this year of misusing charity money after a young woman calling herself "Guo Meimei" claimed online to be a general manager of "Red Cross Commerce" and posted pictures on her tweets detailing her lavish lifestyle.

Netizens related "Red Cross Commerce" to the China Business System Red Cross Society, and speculated that Guo might have funded her purchases by embezzling money from the Red Cross.

In July, the RCSC suspended all operations of the China Business System Red Cross Society and started an investigation along with officials and experts from the Ministry of Supervision, the Chinese Academy of Social Sciences, a law firm and the CGCC.

According to the investigation report, "Red Cross Commerce" does not exist, and Guo Meimei is not employed by the China Business System Red Cross Society or its cooperative enterprises.

The RCSC says it is preparing to set up a public supervision committee, and it plans to invite people from all walks of life, including influential figures, to supervise its use of donations as a third party.

Meanwhile, the RCSC is also building up an online service that will publicize information about all donations made to the Red Cross system nationwide, in a move to safeguard the rights of the public, including donors, and supervise the charity group's operations.

The website is expected to be launched by the end of 2012, the RCSC said.

The RCSC has also vowed to strengthen the supervision and management of its subsidiaries and promote transparency in donations, financial management, tendering and procurement, and fund distribution and use.