scmp: Rail link's saga of waste and fraud goes on

Rail link's saga of waste and fraud goes on

Audit officereports further embezzlement, mismanagement and other serious problems related to high-speed Beijing-Shanghai line

Will Clem in Shanghai Updated on Mar 20, 2012 http://tinyurl.com/7d2zxkm

Evidence of yet more fraud, waste, mismanagement and irregular accounting and procurement worth billions of yuan was uncovered in the construction and running of the Beijing-Shanghai high-speed railway, according to a report by the National Audit Office yesterday. Irregularities included 491 million yuan (HK$600 million) misappropriated or embezzled by local officials. Serious problems and irregularities related to the project dated back to the bidding process in late 2007, with auditors finding the Ministry of Railways had not followed standard tendering procedures for civil engineering work and contracts for construction materials. In some cases, civil engineering companies were given just 13 hours to place their bids, rather than the minimum of five days stipulated by regulations. The report, the audit office's third investigation into the high-profile rail link, also found there had been difficulties in making payments for the construction work. At the end of May last year, the line had debts of more than 8.25 billion yuan owed to 656 materials suppliers and 1,471 construction contractors. There were also unnecessary costs incurred through mismanagement of the construction process. In March last year, the ministry cancelled the construction of 177 kilometres of wind screening, at a cost of 413 million yuan, following an adjustment to the operating speed of trains on the line. The report also found that though construction of the flagship project had been completed on time, it had run almost 20 per cent over budget. Originally budgeted at 163.8 billion yuan, the project's cost swelled to 196.3 billion yuan by late June - before taking into account "partial design alterations, workers' pay and differences in materials prices and other conditions [that will] increase investment that have yet to be finalised". The figures did not include a further 53.8 billion yuan budgeted to pay for trains to run on the line. A series of stoppages hit the line under a fortnight after the service's launch on June 30, leaving passengers stranded in dozens of trains without lighting or air conditioning for periods of three hours or more. The reputation of the mainland's high-speed railway network was further tarnished on July 28, when a collision between two trains near Wenzhou , Zhejiang province, claimed at least 40 lives. In August, 54 trains running on the Beijing-Shanghai line were recalled by manufacturer China CNR due to safety concerns about flaws in an automated safety system which was blamed for causing the delays. It was later reported that metal fractures had also been found in the axles of the trains. However, the auditors' report said there had been a marked improvement in the situation compared to the previous investigation - released in March last year - which had found financial irregularities totalling almost 5 billion yuan. "Up to late September 2011, correction of problems found in the 2010 audit had basically been fully implemented," the report said. will.clem@scmp.com