Hundreds of government officials have been penalized or are under investigation for misuse of government funds, according to a report released Wednesday at a State Council meeting chaired by Premier Wen Jiabao.

As of October this year, the central government treasury had reclaimed 20.9 billion yuan (US$2.5 billion) of the 28.6 billion yuan (US$3.5 billion) that the National Audit Office (NAO) found government departments and local authorities had illegally kept. The discoveries were made during the NAO's audit of expenditures from the 2003 budget.

The individual departments have retrieved 98.8 percent of the funds that illegally withheld, according to report.

The State Council has placed heavy emphasis on correcting such problems, and the report noted that individual government departments have complied with requirements to improve internal management after the auditors uncovered the problems.

Cases currently being processed are expected to be complete by the first quarter next year, according to the report, but the government will continue to work on financial management issues and improve the auditing process.

At the State Council meeting, government departments were also urged to cut costs, increase efficiency and cooperate with auditors.

A report suggesting solutions to these problems will be submitted to the Standing Committee of the National People's Congress (NPC), the country's top legislature.

Also at the meeting, the State Council passed an amendment to the Corporation Law and a draft law on civil servants. These will also be submitted to the NPC Standing Committee.

(Xinhua News Agency December 16, 2004)