GGRAsia – Audit says 25 pct of China lottery funds were misused

Audit says 25 pct of China lottery funds were misused

Jun 26, 2015 Newsdesk Latest News, Rest of Asia, Top of the deck

Chinese authorities have found “widespread misappropriation” of RMB16.9 billion (US$2.72 billion) of funds from its state lottery programme, Reuters news agency reported, citing a study by China’s state auditor.

The misdeeds included allegedly using state lottery money to buy or construct offices and hotels, as well as straightforward embezzlement, the National Audit Office said in the report published on its website on Thursday as reported by the agency.

The auditor said the irregularities accounted for a quarter of the total of lottery funds received in 18 provinces of mainland China in the period of its investigation. The audit covered lottery operations in those provinces between 2012 and 2014, according to Reuters. The state-run welfare and sports lotteries are the only legal form of gambling allowed in mainland China.

The report said 17 provinces had flouted the law by engaging in lottery sales through the Internet without approval from the Ministry of Finance. In another instance of alleged wrongdoing, 32 lottery shops had used RMB3.1 billion to construct office buildings, training centres and hotels, according to the report cited by the media outlet.

Lottery sales in mainland China have been growing, supported by rising disposable income and a more diversified and sophisticated offer of games. Last year saw RMB382.4 billion spent on official lottery tickets, up 23.6 percent from 2013, although some analysts have noted the FIFA World Cup during the summer helped to lift sports lottery sales.

Lottery products are mostly sold through authorised outlets throughout the country in the form of physical tickets, with proceeds supporting sports and welfare charities.

The Financial Times newspaper reported this week that the Chinese Academy of Social Sciences, the country’s main government think tank, had raised doubts on how lottery funds are being spent. The findings were published in the think tank’s annual report on charitable donations.

The researchers said that they could only find evidence that RMB40 billion of a total of RMB100 billion had been spent on social welfare projects.

The newspaper quoted Yang Tuan, the researcher who edited the report, saying: “The most important problem is that the government’s use of these [lottery] funds is completely unconstrained and a share of the funds is not being used for public welfare.”

Probes into the lottery industry in mainland China have led to the temporary suspension of online sales of lottery tickets.

On April 3, eight Chinese central government agencies issued a joint public announcement ordering the suspension of online sales of lottery tickets. They also demanded provincial governmental authorities “to investigate and sanction unauthorised online lottery sales in their respective jurisdictions”.

There is still no official word on when the temporary suspension of online lottery sales will be lifted.