China Huaneng Group accused of major policy violations in building power plants without full approval

China’s state auditor said Friday that it had uncovered major policy violations at China Huaneng Group Corp, the nation’s top power producer, including the building of power plants without approval.

The utility group had started construction on 16 large projects, including the Huangdeng Hydropower Station, as of the end of 2011 without prior approval, the National Audit Office said in a series of reports posted on its website.

A total of 5,417 hectares of land related to 75 projects that Huaneng had started work on didn’t have the necessary permission for land use, the auditor said, adding that the Qimashan Wind Farm in Yunnan Province was one of them.

Separately, the auditor said it also found irregular lending by several major state banks.

In 2011, the Agricultural Bank of China lent a total of 644 million yuan ($104 million) to enterprises that were either incapable of repaying or gave false information, according to the auditor, adding that most of those credits eventually became nonperforming loans.

China Construction Bank lent CNY3.66 billion to companies and projects that did not meet credit requirements while customers of the Import-Export Bank of China apparently misappropriated some CNY5.5 billion of credits from the bank, the auditor said.

The auditor also said it found two subsidiaries of China Minmetals Corp had traded in futures, losing a total of CNY27.2 million, and China National Aviation Holding Company had begun construction of an office building, which was estimated to cost about CNY1.345 billion, without the approval of the nation’s top economic planner.