'Huge sums' embezzled from China rail link

Chinese auditors said Monday 491 million yuan ($78 million) of funds set aside to compensate residents when their homes were demolished to make way for a high-speed railway have been embezzled.

The Beijing to Shanghai link, which opened to huge fanfare in June, had already been the subject of a separate audit last year that found 187 million yuan went missing, but it is unclear if the latest discovery includes that sum.

"Work units along the line pocketed, kept or misappropriated 491 million yuan in demolition funds," the National Audit Office (NAO) said in a statement, adding it conducted its investigation between June and September last year.

According to the NAO, the most serious case in the latest audit involves a sum of 340 million yuan, which was siphoned off by authorities in a district of the northern city of Tianjin.

It added that construction firms involved in building the rail link also owed creditors an estimated 8.25 billion yuan -- including workers' salaries -- by the end of May 2011.

China's high-speed network, the largest in the world with 8,358 kilometres (5,193 miles) of track at the end of 2010, has been plagued by graft and safety scandals since it opened to passengers in 2007.

Last year, former railway minister Liu Zhijun -- who had overseen construction of much of the high-speed network -- was sacked and placed under investigation for corruption.

Then a deadly crash near the eastern city of Wenzhou in July last year -- China's worst rail accident since 2008 -- sparked nationwide concern about the safety of the nation's ambitious high-speed rail system.

At least 40 people were killed in the accident, which has been blamed on design flaws and poor management, and authorities have since frozen the rapid expansion of China's high-speed network.

But just last week, the state-run news agency Xinhua reported that a section of high-speed railway in the central province of Hubei -- which was due to open in May -- had collapsed following heavy rainfall.

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