Chinese Officials Love to Buy Wine, Party in Vegas

A new report from China's national auditor shows that hundreds of millions of government dollars have been misused. That is, if you consider buying vineyards a waste of public funds

Author: Versha Sharma

Posted: 06/27/14

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The Chinese government announced plans this week to establish a powerful global financial institution like the World Bank to rival the international influence of the United States. China’s huge economy may allow it to start the proposed institution with $100 billion in capital. But a new report from the country’s national auditor suggests that China would have more in its coffers if it weren’t for the government’s corruption problem.

In its annual report, the Chinese National Audit Office found that “mismanagement of state assets was rife,” and cited 314 cases involved “major violations” of the law. What precisely the funds were misused for shows that the hard-working communist society likes to party as much as any other country: $43 million granted to companies to buy overseas technology was used to buy 14 French vineyards instead. (Because a dozen just wasn’t enough.)

In another incident outlined in the report, Chinese government officials were supposed to spend a trip to North America studying shale gas technology, but spent three days in Vegas instead. Even better, they later claimed they had been in Canada.

The Chinese press and social media users were quick to mock officials over the Vegas impropriety, taking to Weibo, the local equivalent of Twitter, to scold them. More than 5 million Weibo followers posted the news, soliciting responses ranging from anger (“this country supports a group of crooks”) to satirical support (“scientists also like to gamble”). The officials who spent time in Vegas were from the China Geological Survey department.

The following cartoon was also widely shared on Weibo and in articles about the corruption report:

Chinese Money Trap

The above cartoon lampoons officials from the China Geological Survey for using government funds on a three-day trip to Vegas when they were supposed to be studying shale gas technology in Canada. The plane reads "Geological Survey," identifying the cartoon officials pointing to a city below labeled as Las Vegas. The speech bubble translates as, "It seems there's a gold mine down there. Let's investigate!"

WEIBO

The guys from the Geological Survey weren’t the only government employees to shirk their scientific research duties for more fun pastures; high-ranking officials who went on a trip to Antarctica organized by the State Oceanic Administration wound up spending half their time in France and Chile instead. They may have been using gold fraudulently to trade for wine.

The report also contained the news that $15.2 billion of loans were “backed by falsified gold transactions,” according to Bloomberg.

“This is the first official confirmation of what many people have suspected for a long time—that gold is widely used in Chinese commodity financing deals,” Beijing-based financial analyst Liu Xu told Bloomberg. As China is both the biggest producer and consumer of gold in the world, fraudulent financial deals based on gold could have international repercussions on the price of the precious metal. For example, if the Chinese government reacts to the National Audit Office report by cracking down on financial transactions that involve gold, it “would probably put downward pressure on gold prices in the short-term,” says Danske Bank analyst Jens Pedersen.

Whether or not the Chinese government reacts remains to be seen. President Xi Jinping’s administration came to office promising an end to corruption, and the newest details give concrete fodder to his critics who believe there has been no real change.

For their part, professional wine enthusiasts believes that the vineyard investments borne of misused funds may not have even been worth it. The director of Vineyard Intelligence, a market research and acquisition adviser,told DecanterChina.com that he “never understood the logic of these transactions.”

“The properties themselves were for the most part obscure brands with little obvious rationale from a commercial perspective,” Director Alexander Hall said. ”The only common thread was that most of the properties had impressive chateaux.”

Well, at least any exiled officials will have a lovely place to stay.