‘Small coffers’ at China Telecom paid for feasts and prostitutes
Friday, May 22, 2015 at 7:18AM
Hui Zhi in China, China Compliance Digest, China Telecom, Liu Bo, Wang Haisheng, small coffers

China’s third-largest mobile carrier China Telecom Corp Ltd punished 31 executives found to have engaged in extravagant banquets and prostitution.

The mobile carrier said in a statement that executives at its Beijing branch squandered 79,500 yuan ($12,822) of public funds on lavish banquets and entertainment in a restaurant in Hebei province.

Wang Haisheng, head of Beijing Telecom’s administrative office, was expelled from the party and demoted for soliciting prostitutes in a hotel, according to the statement.

Beijing Telecom head Liu Bo, and deputy heads Sun Hao and Wang Qingyu, were among the executives punished for illegally holding “small coffers” to fund their banquets and recreational activities.

A “small coffer” is a common practice among government agencies and state-owned enterprises for keeping certain public funds off the account books, and using the money for private tours, banquets and other unauthorized activities.

Beijing Telecom executives created a “small coffer” worth 1.96 million yuan ($316,130) by inflating conference expenditures and secretly holding gifts from clients, China Telecom said. Liu and Wang were relieved of their duties.

The penalties were imposed soon after central discipline authorities completed a two-month inspection at the state-run mobile carrier. Other problems uncovered at China Telecom include fraudulent financial records and public-funded gift-giving.

Sources: Caixin, Caijing (财经网), China Daily

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Hui Zhi is the Senior Manager for Content with the China Compliance Digest, where a version of this post first appeared.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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