China rail audit reveals millions lost on fraud

A previous audit in 2010 also revealed financial anomalies in the high-speed rail project

Millions of dollars have been embezzled from the Beijing-Shanghai high-speed rail link project, China's state news agency Xinhua reports.

Audit officials said that 491m yuan (£49m: $77.8m) was lost due to "irregular practises in the construction and management".

That money had been set aside to compensate residents who had their homes demolished by the scheme.

The 1,318km (820 miles) railway began operations in June 2011.

China's National Audit Office (NAO) said it had discovered evidence of fraud and irregular accounting and procurement related to the project in a second round of accounting.

Another audit conducted in 2010 found that 187m yuan ($28.5m; £17.5m) had been stolen by individuals and construction companies. It is unclear whether this figure is part of the current audit.

In a report based on audit done between June to September 2011, NAO said that purchases amounting to 849m yuan were not made through the standard bidding process.

The cancellation of some building contracts also meant that 413m yuan was not used.

According to the report, construction firms that built the railway also owed 8.2bn yuan to suppliers and workers' salaries.

China's high-speed railway network, said to be the largest in the world, has been plagued with corruption and safety scandals.

Its railway minister, Liu Zhijun, was sacked over corruption allegations last year.

The network has also been dogged by a series of accidents, including a deadly crash in Wenzhou city last year that killed 40 people, and the most recent collapse of railway track in Hubei province.