China tightens supervision of allowance issuance

A new regulation targeting improper issuance of official allowances will take effect on Thursday, sounding a warning for those who abuse power to embezzle public money in receiving subsidies. The government has released the regulation to punish officials who improperly hand out allowances, a kind of hidden or tacit corruption. The rules, published July 12 on the Ministry of Supervision's website, were jointly promulgated by the Ministry of Human Resources and Social Security, the Ministry of Finance and the National Audit Office (NAO). Officials responsible for misappropriating state-owned funds or funds for special use and granting them to individuals in the name of allowances will receive a serious demerit, while those involved in serious cases will be demoted or sacked, according to the Regulation on Punishments for Improperly Releasing Allowances. Allowances include salaries, living subsidies and retirement funds, as well as bonuses. The promulgation of the regulation shows that illicit issuance of allowances is rife in government departments and public institutions, said Zhou Hanhua of the Institute of Law at the Chinese Academy of Social Sciences. The State Council, or cabinet, has long stressed prohibition of illicit issuance of allowances, but it has not been implemented well, added Prof. Zhu Lijia of the Chinese Academy of Governance. "The financial systems of some government agencies are not open and transparent and lack effective supervision," Zhu said. Nearly 600 million yuan (97.88 million U.S. dollars) of fiscal funds were not recorded in the government's fiscal system last year, he said, adding that allocating the money ultimately "depends on department leaders." The Communist Party of China Central Committee has strengthened efforts to clear government "small coffers," money that is secretly stored and should not be used privately by certain departments, and illicit issuance of allowances. However, many have flouted the laws due to low cost of violating them. Liu Jiayi, NAO auditor general, told a legislative session in June that an audit investigation of 53 major state-owned enterprises showed that allowances and commercial insurance illicitly given by the subject enterprises to their staff amounted to 557 million yuan in 2012. Under the regulation, officials may also be demoted or dismissed if they are found to have gained allowance money by defrauding fund-granting units or wielded their power to receive allowances from other organizations. Violations also include releasing too many allowances or giving allowances to personnel who are not supposed to receive them, the regulation shows. However, Zhu Lijia said the punishment is relatively lenient, and "many officials will not be deterred by (the prospect of demotion or dismissal) and some of them will be reinstated after being disciplined." Zhou Hanhua said enforcing the regulation will be relatively difficult, as the majority of government officials' salaries are composed of various allowances, and this is accepted as common practice. He called for transparency in civil servants' salaries. The professor urged a reform of public fiscal budgets and a tightening government "purse strings."