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|No. 23 of 2016 (General Serial No. 254): The Audit Results of the Assets, Liabilities, Profits and Losses of China Everbright Group Co., Ltd. for the|
|2017-06-08日 Soure : 【來源:International Cooperation Department】 :|
No. 23 of 2016 (General Serial No. 254):
In accordance with the stipulations of the Audit Law of the People’s Republic of China, in 2015 the National Audit Office (CNAO) conducted an audit on the assets, liabilities, loss and profits of the year 2014 of China Everbright Group Holding Co., Ltd. (hereinafter referred to as Everbright Group), with the extension and tracing back to relevant items. The audit focused on the headquarters of Everbright Group and 7 subsidiary companies including the sub-unit China Everbright Bank Co., Ltd., Everbright Security Co,. Ltd., Sun Life Everbright Life Insurance Co., Ltd., China Everbright Group Co., Ltd., Everbright Financing Holding Assets Management Co., Ltd., Everbright Xinglong Trust Co., Ltd., and China Everbright Industrial Co,. Ltd. (hereinafter referred as Everbright Bank, Everbright Security, Sun Life Everbright Insurance, Everbright Group (HK), Everbright Financing Holding, Everbright Trust, and Everbright Industrial respectively).
After being reorganized in 2014, Everbright Group possessed 7 first-level subsidiary companies. The main businesses it engages in include financial areas such as banking, security, insurance, trust and industrial areas such as environmental protection etc. As reflected in the consolidated financial statement, by the end of 2014, the total assets of Everbright Group amounted to RMB2,957.565 billion, the total liabilities reached RMB2,710.101 billion, and there was RMB247.464 billion worth of owners’ equity. The realized operating revenue of the same year was RMB94.788 billion and a net profit of RMB33.267 billion was earned.
II. Major Problems Found in the Audit
(I) Financial revenue and expenditure
u In 2014, Everbright Bank Guangzhou Branch listed the business which should be listed into investment of accounts receivable into other accounts, resulting in inaccurate accounting, and involving RMB352 million. 3 subsidiary banks in Beijing, Jinan and Shanghai, in order to complete the indicators for the annual profit evaluation, adjusted RMB39.1157 billion of loss and profits through understating income or overstating expenditures. 6 branch organizations of Everbright Bank and Everbright Security disbursed in excess the daily operational expenditures from meeting expenditures, involving a total amount of RMB24.1617 million.
u From November 2007 to the end of 2014, Everbright Group, Everbright Bank and Everbright Industrial, in excess of the limit of the state standard, had paid RMB76.6286 million more of housing funds for the staffs, among which the amount of 2014 was RMB7.3179 million.
u From 2008 to June 2015, Everbright Bank, Everbright Financing Holding, Everbright Security and their subunit companies had purchased commercial insurances and released food allowance besides the total salary, involving RMB63.5567 million, among which the amount of 2014 was RMB14.6655 million.
(II) Decisions making and implementation
u From January to August of 2015, seven subunit first level subsidiary companies of Everbright Group had only reported 14 important accounts for the study of the Group, while they should have reported 71 accounts according to the regulations.
u In October 2013, the 25th board of directors of Sun Life Everbright Insurance decided to purchase commercial buildings at the price of RMB1 billion. The executives sent by the Group to attend relevant meetings failed to report it to the Group.
u From 2010 to 2014, the Everbright Group (HK) had failed to decide major issues by organizing meetings of the board of directors, and instead, they made a written resolution and then had three executives who lived in Hong Kong regularly sign the resolution. The sub-unit China Everbright Holding Co., Ltd (HK) and China Everbright International Co,. Ltd. of Everbright Group (HK), except reporting major personnel appointment and removal to Everbright Group (HK) for examination and approval, had decided all other major issues by their own boards of directors, which was not in accordance with the decision-making system of “three important points and one primary decision”.
(III) Business Operation
u In 2014, six branch organizations including Everbright Bank Hangzhou Branch irregularly offered loans to unqualified individuals and organizations, involving RMB2.555 billion.
u From March 2011 to May 2013, seven branch organizations including Everbright Bank Beijing Branch had irregularly conduct false bills and LC businesses with false trade backgrounds, involving RMB2.662 billion.
u From 2012 to 2014, three branches of Everbright Bank in Shanghai, Hangzhou and Guangzhou had failed to strictly follow the state classifying standards of small and micro enterprises, and included loans lent other enterprises in the accounting of loans earmarked for small and micro enterprises, involving RMB1.381 billion, among which the amount of 2014 was RMB440 million. The RMB140 million of loans for small and micro enterprises issued by Hangzhou Subsidiary Bank were actually extracted by the big companies who provided guarantee for those small and micro enterprises, among which the amount of 2014 was RMB36.08 million.
u From October 2010 to January 2015, Sun Life Everbright Insurance had irregularly gained insurance premium income by means of promising benefits, involving RMB1.479 billion, among which the amount of 2014 was RMB118 million. The subunit Everbright Yongming Asset Management Co., Ltd., through purchasing the financing products initiated by the company itself, made stock investment with the company’s own funds in disguised form, involving a total amount of RMB100 million.
uFrom February 2010 to January 2015, Everbright Financing Holding had invested RMB14.2 million, and in the name of normal partner, irregularly engaged in private fund collection business by forming a partnership, among which the investment of 2014 was RMB1.9 million.
u From May 2014 to March 2015, Everbright Financing Holding had issued RMB150 million of loans in excess of its business scope, among which the amount of 2014 was RMB100 million.
u From December 2014 to January 2015, Everbright Trust had irregularly used its own funds to pay the debit interest for the clients who had bought credit loans from it, which resulted in non-performing loans, involving RMB20.0344 million, among which the amount of 2014 was RMB9.9594 million.
(IV) Risk Management and Internal Controls
u From 2009 to 2014, Everbright Bank and Sun Life Everbright Insurance had failed to strictly follow the mass purchase biding system, failing to conduct public bidding in accordance with the regulations and purchasing in opposition to procedures, involving RMB393 million, among which the amount of 2014 was RMB4.4476 million.
u In 2014, five branch organizations including Everbright Bank Chengdu Branch failed to strictly implement the management system after offering loans, resulting in RMB2.815 billion credit funds being embezzled. Branch organizations in Guangdong and Shanghai failed to effectively control the risk of iron trade and other trades, resulting in enormous bad loans in relevant branch organizations. From January 2013 to June 2015, the accumulated bad loans had reached RMB4.522 billion, among which the amount of 2014 was RMB1.459 billion.
u In 2014, three branches of Everbright Bank in Guangzhou, Shanghai and Nanjing failed to strictly check the authenticity of the trade contracts presented by clients when handling sales of exchange, involving RMB4.539 billion.
u From 2013 to 2014, three branches of Everbright Bank in Hefei, Beijing and Hangzhou had evaded regulatory requirements through interbank business or performed irregularly when doing interbank business, involving RMB2.6 billion. Besides, some other irregular behaviors still existed such as absorbing deposits through offering loans and Letters of Credit.
u From 2012 to 2014, Everbright Bank had failed to maintain a dynamic management of the line of credit in accordance with the clients’ credit status, card use situation and risk information, and failed to transfer RMB16.0848 million of expenses in other Everbright credit cards under Everbright Bank to non-performing loans while 448 clients’ credit cards had formed RMB10.3926 million of bad debts and had been canceled upon verification, among which the amount of 2014 was RMB7.4093 million.
u Some workers in Everbright Bank had irregular behaviors, among whom 2 financial managers in Shanghai Branch personally sold stock rights to invest in funds. By the end of May 2015, there had been RMB154 million of the balance of the funds which were unable to be cashed. A customer manager in Shanghai Branch irregularly used his/her own account to borrow RMB700,000 from the public credit customers account under his/her management for friends. Some workers in Dalian Branch and their relatives irregularly lent out usurious loans.
u In regard to information system construction, Everbright Bank had some problems such as the client information was recorded abnormally; the daily record management of email system was not in compliance with the regulatory requirements; some outsourced information systems were not checked and accepted in accordance with the regulations. In 2013, Everbright Security put the trading software online for firm offer operation without check, resulting in major risky incidents.
(V) Professional Ethics
uFrom 2008 to 2012, Everbright Bank built background service center and decorated the office building in excess of standards, involving RMB74.0733 million. The subsidiary company of Everbright Yongming purchased one premium car, involving RMB558,500.
u From 2013 to 2012, Everbright Bank, Everbright Security, Everbright Financial Control and Everbright Group (HK) had irregularly reimbursed expenses, which was against the spirit of CPC Central Committee’s eight-point rules, involving RMB2.1689 million.
(VI) Rectification of Issues Found in Audits of Previous Years
In 2007, the CNAO found that Everbright Bank provided subsidies for government vehicle reform for staffs beyond the total salary through invoice reimbursement, and the bank did not stop the practice and RMB22.7017 million has since been distributed again. In 2009, the audit found that the sub-unit Sanya Yalong Bay Golf Club Corporation of Everbright Group (HK) had irregularly rent agricultural land to build the golf course, which has not been rectified yet.
Clues related to issues in violation of laws and disciplines discovered through the audit have been transferred to departments concerned for further investigation.
Regarding to issues discovered through auditing, the CNAO has issued audit report and released letters of audit decisions. Everbright Group has established rectifying accounts and strictly carried out the work of evaluation of rectified results. 94 relevant regulations have been made and relevant persons in charge have been dealt with. Everbright Group will notify the general public of the details of rectification.
III. Audit Disposal and Rectification
The audit results indicated that Everbright Group actively established and improved the corporation management system, completed reform and reorganization, accelerated the implementation of comprehensive operation. The assets scale increased year by year and the profit improved continuously. However, the results also demonstrated that some weak links still existed in fields such as financial revenue and expenditure, major decisions making and implementation, business operation, risk management and control, and professional ethics.