Two civil servants have been punished in connection with a
pension fund scandal in Guangzhou, capital of south China's Guangdong Province.
The information was revealed by Cui Renquan, chief of Guangzhou
labor and social security, while answering questions on Wednesday
concerning the loss of more than 600 million yuan of the city's
pension fund.
The two officials are Cai Yaokun, formerly deputy director of
Guangzhou City administration for social insurance, the forerunner
of Mr. Cui's present department, and the manager of the Guangzhou
Social Labor and Insurance Co. identified by his surname as
Liu.
The Guangzhou Social Labor and Insurance Co. was the predecessor
of the present-day Guangzhou Center for Administration of Social
Insurance Fund.
According to Cui, Cai, who was put in charge of social insurance
fund work between 1996 and 2001, siphoned off money and invested it
in highly risky businesses such as real estate between October 1998
and the spring festival of 2000.
Unable to recover the misappropriated money, Cai reportedly
turned himself in to police in 2001. But he was convicted of
bribe-taking in September 2002 and sentenced to 10 years in jail by
the Intermediate People's Court of Guangzhou City.
Manager Liu, who bore a heavy responsibility in the affair, went
into hiding but was arrested by police in December 2006.
Local prosecutors have completed an investigation into Liu's
case and he will soon appear in court.
Briefing an investigative group from the Standing Committee of
the Guangdong Provincial People's Congress on Monday, Cui said more
than 600 million yuan worth of Guangzhou pension funds had vanished
into thin air and could not be recovered.
Cui said the vanished pension funds were a problem left over
from the mid-1990s.
A document issued in 1993 by the then Ministry of Labor
encouraged officials to transfer a portion of their pension funds
to state banks, trusts and investment companies.
This prompted the pension fund company affiliated with Cai's
Guangzhou City administration for social insurance to invest some
of their funds.
But the following year the ministries of labor and finance
issued a new document banning the investment of pension funds on
the open market and demanding the recovery of money withdrawn from
pension funds for commercial operations.
In 1998, a total of 1.02 billion yuan of pension funds were
still tied up in commercial operations and could not be recovered,
according to Cui.
"As a matter of fact, efforts to recover the money began as
early as 1996 when the city bureau for administration of social
insurance was inaugurated, but little progress was made in this
regard because 86 percent of the money was tied up in the real
estate sector and debt relations were very complicated to sort
out," said Cui.
In 2001, Guangzhou set up a special office tasked with
recovering the pension funds, with a deputy mayor in charge. It
also put 50 million yuan into a reserve fund to offset possible
losses.
By March of this year, 360 million yuan had been recovered, and
there are hopes for another 105 million yuan, according to Cui. A
total of 18 criminal cases have gone to trial in relation to the
affair.
The National Audit Office audited the misuse of the pension fund
last year but their conclusions are not known.
City mayor Zhang Guangning commented: "If the pension fund
cannot be recovered, the Guangzhou city government will follow the
recommendation of the National Audit Office and use the reserve
fund to make up the shortfall."
(Xinhua News Agency April 6, 2007)