China Railway/Midas: China's state auditor has disclosed that millions of dollars in funds for the construction of a high-speed railway linking Beijing & Shanghai were embezzled last year. The revelation follows last month's sacking of railways minister Liu Zhijun, who allegedly pocketed more than Rmb800m in kickbacks linked to contracts for the expansion of China's high-speed rail network while some construction companies & individuals siphoned off Rmb187m.
Other problems uncovered included improper bidding processes & the filing of fake invoices. Work on the 1,318km line costing Rmb221b started in Apr 08 & is expected to open in Jun. China has invested heavily to expand its high-speed rail network from 8,358 km as at end 2010 to 13,000 km this year.
After spending over $240m on capacity expansion over the past 3 yrs, any delays in new contract wins may not auger well for Midas & we hope the company would not be implicated in the ongoing corruption scandal.
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