A county in Northwest China that was hit by a devastating earthquake in 2008 was suspected of mishandling relief and reconstruction funds appropriated by the central government, according to media reports.

The disclosure by the media prompted the provincial government of northwest China's Gansu Province to deploy a team of investigators on Friday to check out complaints lodged by county residents about shoddy building work on homes they were rehoused in, as well as claims by local businesses that funds for reconstruction were never allocated by the county government. In Renjiaba village of Wenxian county, cracks were clearly visible in many of the houses built for 44 families that became homeless in the May 2008 earthquake, reported the Beijing-based Economic Information, which is owned by Xinhua News Agency.

There were also poorly constructed relief houses in two other county villages, the paper said.

Residents of Renjiaba village said they reached a compensation deal with the building contractor over the past year, but the contractor has yet to pay them any money.

For several businesses whose workshops were badly damaged in the 2008 quake, the reconstruction funds that had been promised by the local government as relief aid could only be acquired in the form of guaranteed loans, Liu Kangping, director of the Wenxian County Longjiang Silicon Industry Co, told China Daily on Monday.

The company, along with nine other silicon plants in the county, had been operating in half-collapsed factory buildings in need of reconstruction since they resumed operations in August 2008, Liu said.

According to Liu, the county government had placed his company on a list of local businesses that were eligible to apply for reconstruction funds provided by the central government. However, the county government kept the funds and demanded that Liu's company agree to the terms of a guaranteed loan.

"My company lost assets worth more than 20 million yuan (US$2.9 million) in the earthquake," said Liu. "I cannot afford the guarantees. Now all I can do is wait."

The decision to change the policy for allocating the funds was made in 2010 by the government of Longnan city, which administers Wenxian county, Economic Information reported county officials as having said.

The change in policy led to 81.48 million yuan in reconstruction funds earmarked for businesses in Wenxian being frozen, the paper said, citing figures provided by the office of post-disaster reconstruction in Gansu province, a provincial government body responsible for managing the relief aid.

Longnan city did not follow the rules for distributing the funds, Zhu Humin, an official with the office, told Economic Information.

The office never approved the move despite receiving repeated requests from Longnan city, he added.

(China Daily January 18, 2011)