Cabinet announces audit of state company assets abroad

The Cabinet agency that oversees China’s biggest banks, oil producers and other government companies has announced plans to have outside auditors examine their foreign assets in a new move to tighten control over state industry.
The announcement comes amid a spreading anti-corruption crackdown led by President Xi Jinping in which executives of companies including PetroChina Ltd. and China Mobile Ltd. have been detained.
The State-Owned Assets Supervision and Administration Commission announced Monday it was soliciting tenders from outside auditors for contracts to examine the companies. It said the firms chosen must be incorporated in China and local branch offices are ineligible, which would rule out the use of foreign firms.
State-owned banks and oil, mining and other companies are quickly expanding their investments abroad, especially in buying resource assets in Africa, the Americas and Australia.
The audit is intended to “address growing concerns about lack of transparency” about the assets of state companies, the official Xinhua News Agency said.
The foreign assets of the 110 state companies directly controlled by the Cabinet were estimated at 4.3 trillion yuan (USD700 billion) at the end of 2013, according to Xinhua.
This week, the party announced the vice chairman of PetroChina, Asia’s biggest oil and gas producer, was under investigation for what the company was a possible discipline violation, the party’s term for corruption.
The company and its parent, China National Petroleum Corp., are among China’s biggest foreign investors. At least four other executives of PetroChina or CNPC have been detained.
Beijing has encouraged state companies to expand abroad and has eased controls on their activities as part of efforts to diversify the Chinese economy.
That has led to complaints managers of politically influential state companies might be misusing their assets.
Among other things, Chinese economists believe a big share of foreign investment into China really comes from units of state companies abroad that are improperly trying to take advantage of tax breaks and other incentives. Joe McDonald, Business Writer, Beijing AP