Monday, July 26, 2004

Recently, the mainland media is awashed with more reports on the heroic Audit Agency and hinting at "big fish" not being caught.  Again, I think it is an attempt by the Hu-Wen team to unsettle Jiang's power base.  The auditor-general was recently quoted as saying that he has the premier's full confidence. 
The biggest target recently, the Planning Commission, is the strong-hold of Jiang loyalist Zeng Peiyan.  Zeng has been frustrating Wen's macroeconomic tightening by saying that the economy is not really over-heated.  The audit might have put the Planning Commission back on the defensive. 
The real test of how far Hu-Wen wants to take this "storm" is the current audit of Netcomm, where Jiang Mianheng is the CEO.  Will they report wrongdoings at Netcomm to the public, or will they merely blackmail the Jiang faction into giving up power with problems they discover during the audit?  I think there is more to come out of this.  Note also that this is happening in the run-up to the 4th plenum. Attached is an excellent article on China Daily, the official English newspaper, on this topic:

Audit report fallout stirs public interest2004-07-26 06:12

One month after Auditor-General Li Jinhua deliveredhis report to the National People's Congress StandingCommittee revealing embezzlement of public funds insome government departments, the "audit storm" isstill a hot topic of discussion. The following areexcerpts from media commentaries:Beijing News: In a joint survey of 5,200 respondentscarried out by China Youth Daily and the Xinhuawebsite, 76 per cent expressed concern forAuditor-General Li Jinhua's personal security.Such worry is not unwarranted, since his recent reportto the National People's Congress (NPC) StandingCommittee exposed some departments' misuse of publicfunds and will hurt the interests of some organs andindividuals who might seek revenge.Although now the National Audit Office (NAO) can carryout its work in line with laws, due to the incompleteconstruction of law-based administration, much work ofthe NAO still depends on administrative power.Without enough legal references or support forauditing from senior officials, it is difficult forthe NAO to carry on investigations. When they arepressured to release audit results in the face ofpotential retaliation, it makes them heroic in theeyes of the public.To ensure auditing is carried out in a stable way andto safeguard auditors' security, legal procedures mustbe put in place.With legal reference, the NAO will not depend onadministrative support, and disputes between auditorsand auditees would be settled through laws. Auditorscould release their reports in related NPC meetings,while the auditees involved could also defend on theseoccasions. Through such a mechanism, truth could bepursued in an unencumbered fashion.Progress has been made in auditing based on laws. TheNAO has carried out work in line with some legalregulations and submitted the results to the NPCStanding Committee for release to media.But it is improper that auditors and auditees maketheir arguments in the media. The argument mechanismshould be introduced in meetings under the NPC.When legal procedures are completed, people will nolonger need to be concerned for auditors' personalsecurity.China Youth Daily: Problems revealed inAuditor-General Li Jinhua's report should be swiftlydealt with.According to an official in a local audit bureau, theNAO has issued its subordinate a ban on givinginterviews to any media not approved by the NAO.An official in the NAO confirmed this, though herefused to answer other questions.To make administrative affairs transparent, providinginformation is an obligation of governmentdepartments. It also fulfills the people's right toknow. Thus the practice of government rejecting mediainterviews is usually criticized. But in this instancethe NAO's restrictions on interviews is not to blame.Strong responses to Auditor-General Li Jinhua's reporthave put the NAO and Li at the centre of the storm andstress.The State General Administration of Sports admittedtheir misuse of money, but gave no account on how tocorrect the problem. What's more, they cited manyexcuses and warned the media not to highlight the caseas if it was not them but the NAO and media who wereguilty of wrongdoing.A boss in the State Power Corporation, aproblem-ridden department exposed by Li's report, evensaid "the NAO's disclosing of their problems hasaffected employees' morale in fighting against thecountry's power shortages." Some officials in theadministration of Yangtze River embankmentconstruction and management expressed their belief theNAO was merely trying to bolster its own credibility.The "audit storm" has been blowing for a month. Exceptfor the blowing-off of some low-rank officials, suchas those being punished in the Dayao County ofSouthwest China's Yunnan Province for divertingdisaster-relief funds, most of the big fish are stillsafe and sound, while the NAO has become the target ofsiege and attacks.After he delivered the report, Li expressed that"non-intervention is the biggest support" to auditwork from the central government. He said his job hasnever been compromised by any State leader. Such"non-intervention" is widely hailed by the public.But in fact, support from the central government goesbeyond "non-intervention." Li said the State Councilhas ordered related departments to conduct thoroughinvestigations and administer severe punishment tothose responsible.But a month after the publishing of the report, whathas been done to solve the problems?It's time for related departments to make their moves.Dahe Daily: Since Auditor-General Li Jinhua deliveredhis report to the NPC Standing Committee on June 23,people have been eagerly awaiting answers to someburning questions. Will the law breakers be heldresponsible? Will those involved in corruption bepunished by law?Now, one month later, why is it that some of those bigfish have escaped unscathed?Those ministries who made fools of themselves in theaudit report either made excuses for their wrongfuldeeds or claimed the NAO was trying to boost its ownmerit.Over the past month the NAO and the auditor-generalhave been under tremendous pressure.A test of strength has been going on between the NAOand those problem ministries, and between Li Jinhuaand the officials who stand accused.People have every reason to worry about whether theNAO and Li will be defeated in this test.The NAO and Li rely on the power granted by theConstitution and law, and are backed by public opinionand support, as well as State leaders'"non-intervention." But those problem ministries andfigures depend on their long-cultivated power networkand the "hidden rules of officialdom."Past experience tells us that it is very possible thatmanipulated by certain departments and functioned bythe dark rules, problem ministries and shadowyofficials will be softly dealt with and the "auditstorm" will simply blow over in the end.If that turns out to indeed be the case, the publicwill justifiably feel ashamed and desperate.Some people suggest upgrading the NAO and itssubordinates so they can take an advantageous place inrank when supervising other departments. A highofficial in the NAO has suggested establishing anaudit institution to share equal status with theSupreme People's Court and the Supreme People'sProcuraterate, and report directly to the NPC and itsstanding committee.Determining whether these suggestions are workablestill requires observation and study. But theycertainly show people's concern over the battlebetween the NAO and those problem ministries.Normally, the NAO should not be beaten given it haspower granted by law, public support and Stateleaders' "non-intervention." Therefore, the "auditstorm" is a touchstone.The final result will clearly show which side standsstronger: rule by man or by law, the hidden rules ofofficialdom or governance according to law.(China Daily 07/26/2004 page6)

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