By Michael Evans
A state-backed children’s charity has been accused of money laundering, after an online commentator revealed an alarming discrepancy in the group’s accounting.
The China Charities Aid Foundation for Children was revealed to have spent 4.84 billion yuan on “other expenditures related to business activities” in 2011, an exorbitant sum given that the group received only 80 million yuan in donations.
Zhou Xiaoyun posted a copy of the charity’s financial statement on his blog Monday, questioning where the money had come from and where it was going.
The foundation responded the same day, saying that the 4.84 billion figure was an error on the statement, and was actually only 484 million yuan, the majority of which went into investments.
But the explanation did little to dissuade skeptics. When the foundation later released more complete accounts, many accused them of being falsified.
Others who have taken the accounting error at face value still see it as symbolic of deeper, more systemic flaws in China’s charities.
From the SCMP:
The Legal Daily said in commentary that such an accounting error was inexcusable, disrespectful to donors and a threat to the credibility of all charities.
“Even it’s a blunder with a decimal point, it’s without a doubt no small mistake as it exposed how flawed the accounting systems at some of our charitable organisations are,” the paper said.
Professor Deng Guosheng, who heads Tsinghua University’s NGO Research Centre, told Xinhua that mistakes on the foundation’s accounting reports show how little mind mainland charitable organisations pay to disclosure.
“It’s also demonstrates that much more needs to be done to regulate them,” Deng said.
Many in China have pushed for tighter regulation of charities in the wake of last year’s Red Cross scandals. The Ministry of Civil Affairs in July ordered charitable groups to publish details of expenditures and donations, and also barred charities from engaging in profit-making activities.