Financial experts have called for an investigation into a charity based in central China's Henan Province as evidence mounts that it uses donations to profit from land speculation and lending.

A 24-meter stone statue of Soong Ching Ling (1893-1981) is going up in Zhengzhou, capital of Central China's Henan province. The statue of one of the most prominent women in China's modern history has become embroiled in controversy after the foundation responsible for the construction reportedly denied it resembled Soong Ching Ling. [Photo/cntv]

The Henan Soong Ching Ling Foundation was first reported by news media of abusing and profiting from donation money in September. Now a 400-million-yuan (US$62 million) land project in the central business district of Zhengzhou, Henan's capital, has put the spotlight back on the charity.

Xinhua news agency yesterday said the foundation has for years been using the savings of farmers in Henan's vast rural areas for land speculation and loans. Many farmers have joined the charity's "public welfare medical insurance," but sources have told Xinhua most of the farmers buying this insurance were attracted by an interest rate higher than banks offer.

Banking professionals said this was financially fragile and could lead to huge losses for the farmers.

A village official in charge of selling the insurance in Luohe City told Xinhua that farmers were promised an annual 400 yuan for each 10,000 yuan deposited. In one recent year, a single village in the area deposited 1.8 million yuan, the official said.

The Xinhua investigation also revealed the fund had created a number of commercial companies through which it speculated on property, lending and other financial business sectors.

The foundation management refused to explain the high-value "account receivables" on its balance sheets and those of its subsidiary corporations, Xinhua said.

The news agency said by the end of 2008, the fund had total net assets of 1.54 billion yuan, but by last year net assets had leapt to 2.97 billion yuan - a near doubling in two years.

In terms of assets, the foundation has become the wealthiest charity in China, according to Xinhua.

Last year, the charity registered a total income of 1.03 billion yuan, including 1.01 billion yuan in donations. However, the documented expense for "charity projects" was only 139 million yuan. In addition, "account receivables" totaled nearly 2.46 billion yuan.

Experts interviewed by Xinhua said the huge investment income figure was "unprecedented and abnormal" for a charity, and they criticized its disproportionately low spending on charity projects.

Xinhua also found that foundation secretary Zhang Handong has shares in an investment corporation affiliated to the foundation. He holds 10 percent of the company, which has registered capital of 50 million yuan.

Recent reports have focused on a project of the foundation that included a giant sculpture, apparently of Soong Ching Ling, a devoted charity practitioner and wife of Dr Sun Yat-sen, founder of the Republic of China.