A staggering 4 billion yuan ($593 million) was misappropriated and 467 million yuan lost or wasted by the government last year, the country's top auditor² said yesterday.

Audits³ of 55 central departments exposed illegal allocations of funds totaling 3.5 percent of funds, and loss and waste of funds totaling 0.4 percent, said Liu Jiayi, head of the National Audit¹ Office in a report to the ninth session of the Standing⁴ Committee of the 11th National People's Congress, China's top legislature.

The report said the illegal funding allocations involved misappropriation, false reimbursements⁵, illegal collection or incomplete bookkeeping.

Liu said audits of central departments show management of expenses for conferences and official trips "is not strict enough" and some units have problems of extravagance, waste and false reporting of expenses.

"Some officials increase the number of personnel, change the route or prolong the duration of official trips abroad without permission," said the report.

Auditors⁶ also found some banks illegally lent 21.5 billion yuan in land reserve loans, fake mortgage loans and loans provided to substandard real estate companies.

About 27.3 billion yuan of illegal loans have been recovered and efforts are being made to retrieve⁷ the rest. Almost 500 people were punished, the report said.

To date nearly 1.5 billion yuan of the misappropriated funds had been recovered.

Meanwhile, the audit found 13 government departments had cheated, embezzled⁸ or not accounted for 4.1 billion yuan in water pollution prevention and management projects. Thirteen cities in the Bohai-Ring area illegally used 1.1 billion yuan for water pollution prevention and management.

In addition, an investigation⁹ of investment projects, including money intended for the Wenchuan earthquake rescue and funding for people affected¹⁰ by the financial crisis, found 119 cases of suspected criminal behavior involving 221 people.

In 2007, 26.7 billion yuan of embezzled public funds were recovered or returned. Thirty people were arrested, prosecuted¹¹ or sentenced and 117 people given administrative¹² punishments.