Wall Street Journal, May 23, 2011
By JOSH CHIN
BEIJING—A Chinese government effort to acknowledge problems surrounding
the country's giant Three Gorges Dam continued as the dam's state-run
operator announced it planned to overhaul its finances following a
China Three Gorges Corp. said Sunday that the audit, conducted by the
National Audit Office, had uncovered 31 "financial issues" related to
"accounting, financial management, investment, bidding and corporate
management," the state-run Xinhua news agency reported.
"The audit findings released by the NAO are a true reflection of our
company's problems," Sha Xianhua, a vice manager of the company, was
quoted by Xinhua as saying. "Ten of the problems mentioned in the audit
findings have already been rectified, and we are still working on the
The revelation of financial troubles at the world's largest hydropower
station came just days after China's State Council released a surprise
statement admitting the dam had created "urgent" social and
Activists speculated that the statement from the State Council might
have been triggered by a severe drought affecting swaths of central and
eastern China, which has forced officials to discharge massive amounts
of water from the Three Gorges reservoir—prompting fears that rapidly
falling water levels could lead to landslides or even earthquakes.
"The water shortfalls from this spring have spread through many of
China's provinces, making it impossible for the central government to
cover up the problems," said Dai Qing, one of China's most veteran
environmentalists and a staunch critic of the dam.
Ms. Dai and other activists have expressed skepticism that the
government can do much to solve the most severe environmental problems
associated with the 180-meter-tall dam, insisting the damage has already
Rumors of graft and inappropriate bidding practices have dogged the $23
billion dam since construction began in 1994, but official confirmation
of financial misdeeds have been few and minor.
Government audits in 2007 discovered that contractors working on the dam
had overcharged by nearly 500 million yuan, or roughly $77 million, and
that local government agencies had used nearly 300 million yuan in
funding intended to help re-settle people displaced by the dam for other
purposes, such as loan repayment and office remodeling.
China's government regularly reports problems at its state companies as
a result of official audits, though the disclosures seldom result in
major change. China Three Gorges was one of 17 state-run enterprises
covered in the latest audit, Xinhua said without providing further
detail. On Friday China Unicom (Hong Kong) Ltd., one of China's big
telecommunications carriers, said an audit of its state-owned parent had
uncovered misallocation of expenses between companies in the China
Unicom Group and issuance of improper invoices.
Attempts to reach Mr. Sha were unsuccessful, but in a brief written
statement to The Wall Street Journal on Sunday night China Three Gorges
confirmed the contents of the Xinhua report and said the company's
announcement about the audit wasn't connected to last week's statement
from the State Council about problems at the dam.
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