COSCO recorded CNY298 million (USD48 million) less in its revenue and CNY169 million less in cost for the 2008-13 period, leading to an understatement of CNY116 million in its profit for 2013, according to a National Audit Office (NAO) report.
The report, released on 28 June, revealed that COSCO posted a loss of CNY34 billion in its long-term chartering business from 2009-13 because of lower freight rates, low ratio of orders secured with cargo sources, and unsettled off-hire agreements.
Two of the group’s subsidiaries – COSCO Logistics and Lianyungang COSCO Shipping Engineering Company – contributed to huge earning losses.
As of June 2013, COSCO Logistics recorded a loss of CNY157 million, while Lianyungang COSCO Shipping’s liquidation upon dissolution in May 2013 caused the group to suffer a loss CNY75 million.
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Misbehaviors of COSCO’s several subsidiaries were also found during the audit. Its branch Shanghai PanAsia Shipping chartered back seven old ships that had been sold out during 2010-12, causing a loss of CNY75 million as of June 2013. Chimbusco International Petroleum (Singapore)’s sales on credit led to a loss of CNY83 million as of September 2012, and COSCO Shipyard suffered a loss of more than CNY100 million as of May 2014.
Fourteen state-owned enterprises were reported to have falsified CNY29.8 billion in revenue and CNY19.4 billion in profits, according to NAO reports.
The audit was part of President Xi Jinping’s anti-corruption campaign, which was targeted to isolate improper allocation and management of funds among state-owned enterprises.