In recent two years, the loss of state assets in SOE restructuring has dominated occupational crime cases handled by the procuratorial organs in Jiangsu Province. It is said the total number has reached over millions of yuan. Although the reasons are complicated, the main tricks used look something like this.
Trick One: Turn profits into fees for housing, water and electricity. In this way, enterprises can reduce assets or produce a zero statement, even making it a loss. Take one enterprise under the Jiangsu Chuanyuan Group for example. It had been in the state of non-profit making for quite a long time and was nearly bankrupt. Yet, even such a poor enterprise hid its business-making opportunities. During the restructure process, its legal representative earned 343,300 yuan by making a false report turning profit into housing rents, water costs and electricity fees, as well as telephone bills.
Trick Two: Be the legal representatives of both an SOE and private company concurrently. Yao, one manager in charge of an enterprise under one group in Jiangsu, had his own private factory secretly. In this circumstance, both the products and the sales channels of his private company were all from his state-owned enterprise without any additional costs at all. Yao also used state assets as profit and divided them among shareholders even when his private company did not make any money. By this means, a total of over 800,000 yuan of state assets flowed into his own packet while the state-owned enterprise turned bankrupt.
Trick Three: Play tricks in the evaluation and restructure report. One trading company adopted the method of not accounting for its money properly, pretending instead it was for salaries, turned a recent profit of 5.28 million yuan into dozens of deposits in bank, even changing 600,000 yuan into private deposits. In fact, the huge capital of 5.28 million yuan did not appear in the asset evaluation report when the enterprise restructured in 2003.
Trick Four: Spend money in the sudden purchase of equipment and ignore intangible assets. One manufacturing state-owned enterprise made the decision to buy imported equipment and rebuild old factories in an effort to consume leftover profit before restructuring. During the restructure process, again, the enterprises practiced fraud by saying the newly bought equipment was out of date and totally ignored the existence of the intangible assets of its sales channels as well as of its intellectual rights.
In addition, the procuratorial officials have found that in the restructuring of some state-owned enterprises, general workers or worker representatives were excluded. All the materials submitted were just personal decisions from managers, who were usually legal representatives. Some even carried out fraud with the help of state asset evaluation companies. All this has contributed to the huge loss of state assets in China.
(China.org.cn by Zheng Guihong September 15, 2003)
