An unlicensed orphanage has been closed after it recruited 20 children to act as orphans in a bid to raise funds, officials in north China's Hebei Province said yesterday.

The orphanage, set up in an abandoned school, approached a company based in east China's Shandong Province early last month asking for donations, according to a report in yesterday's Yanzhao Metropolis Daily.

An executive with the Shengdahuatian Group visited and promised to set up a charity foundation and donate 500,000 yuan (US$80,585), it reported.

On June 25, the company held a fundraising activity to which the "orphans" were invited. Staff donated a total of 17,000 yuan.

However, when orphanage officials demanded the 517,000 yuan in cash the company became suspicious.

And when the person in charge said the children wouldn't leave until the money was handed over, it realized it had been fooled.

Only one of the 21 "orphans" was genuine, the others had been paid 500 yuan each to pretend, the newspaper said.

The orphanage admitted the ruse but police said that because it hadn't received any money there was no fraud.

A nursing home for the elderly was another occupant of the abandoned school, the newspaper said.

Officials from the home said the orphanage had existed for less than three weeks. Children collected from nearby villages to play the part of orphans had gone home with their families after the scandal was exposed, they said.

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