HAVING FUN: Children with cleft palates participate in a summer camp organized by the Smile Angel Foundation in July 2013 (LIU CHANGLONG)
Charity in China has been put under scrutiny again after a recent investigation by Zhou Xiaoyun, a netizen famous for exposing scandals in the field.
From January to February, Zhou posted several messages on his microblog, alleging that the Smile Angel Foundation (SAF) had embezzled more than 50 million yuan ($8.09 million) of its donations and that its co-founder, actor-turned-businessman Li Yapeng, had failed to donate 1 million yuan ($161,000) of funding capital as he promised.
On March 9, Minister of Civil Affairs Li Liguo said that authorities will give a full and concrete response to the public about the accusations. He made the remarks while attending the annual full session of the 12th National People's Congress, China's top legislature.
Zhou said that he hopes his findings will prompt lawmakers to make laws requiring charitable organizations to publish their financial information. He also revealed that his recent questioning has caused the Ministry of Civil Affairs (MCA) to issue new standards for the annual inspection of charitable organizations.
The SAF was founded in 2006 by famous singer Faye Wong and her ex-husband Li to help children born with cleft palates. Their own daughter was born with a cleft palate, which was later corrected with surgery. Wong and Li divorced in 2013.
The foundation is affiliated with the Red Cross Society of China (RCSC). According to an audit report published on the SAF website, it had received more than 130 million yuan ($21.02 million) in donations by the end of 2012.
In 2012, the SAF set up the non-profit Beijing Smile Angel Children's Hospital (SACH), which promised to offer free surgery to 600 children with cleft palates each year.
In response to Zhou's accusations, the SAF issued a statement on January 20, denying the claims. It added that the 53.22 million yuan ($8.61 million) in question has been spent on establishing the SACH.
As to whether Li and his ex-wife had donated the 1 million yuan of funding capital, SAF's public relations officer Qi Xin told Beijing-based Legal Weekly, "The money has definitely been donated."
As to why it was not recorded, Qi explained that it was because of ignorance at the foundation's inception, when it had neither an expert consultant, nor a professional manager experienced in managing a non-governmental organization.
On February 26, the RCSC had an independent auditing team come and audit the SAF. The audit results are expected to come out later this year.
Zhou argued that the SAF and the SACH had not disclosed information properly.
For instance, he said that in 2013, the hospital released a work report, but failed to make a financial statement or audit report.
On January 8, Zhou requested Beijing Chaoyang District's Civil Affairs Bureau and Health Bureau to disclose information about the SACH, including the hospital's capital verification report and the sources of its registered capital.
Zhou made the request based on Beijing Municipal Government's Decisions on Promoting Philanthropy, which went into effect on January 1. Article 15 of the document requires charities to publish information such as fund-raising activities, the source, type and value of donation, the usage of donations, as well as annual work reports and audit reports.
On February 27, Chaoyang District's Civil Affairs Bureau said that it had required the SACH to disclose relevant information.
But Li claimed that the foundation and the hospital had disclosed information according to government requirements.
The Provisional Regulations for the Registration Administration of People-Run Non-Enterprise Units, promulgated by the State Council, China's cabinet, in October 1998, stipulate that non-governmental organizations are to report information on donations and their usage to supervising organizations and publicize that information in a proper manner. However, the document does not specify what the proper manner is.
The statement released by the SAF on January 20 said that the 53.22 million yuan spent in establishing the SACH was explained in the footnotes of the RCSC's annual audit reports in 2010, 2011 and 2012.