Chinese SOEs Cooking the Books

Reuters: Sinopec subsidiaries inflated 2014 revenue, costs by $3.04 billion: government auditor

Subsidiaries of China's second-largest energy company Sinopec inflated their 2014 revenue and costs by 20.2 billion yuan ($3.04 billion), according to a report published by China's auditing department.

Twelve subsidiaries of Sinopec Group, the parent of Sinopec Corp (0386.HK), have manipulated their financial reports by creating fake invoices of fuel sales, among other discrepancies, the report from the China National Audit Office published on Wednesday said.

The audit also showed Sinopec lost 1.29 billion yuan after it acquired a 49-percent stake in an overseas project, due to "insufficient assessment of risk factors," said the report, without identifying the project.