(CFP)

The nascent supervisory committee of the Red Cross Society of China (RCSC), set up to repair the organization's tarnished image has found through an internal audit that the charity does not possess several dozen luxury villas contrary to online allegations.

On December 12, 2012, a netizen named Mencius microblogged that the RCSC owned 30 to 40 luxury villas near the venue of the 2008 Beijing Olympic Games, and for a decade, the RCSC had been operating them as hotel rooms with amenities such as swimming pools, karaoke lounges and ballrooms. He speculated that these properties had been purchased with donated funds.

The RCSC responded the next day, denying ownership of the villas and saying that it would investigate.

On January 4, 2013, the RCSC's supervisory committee—composed of 16 people outside the Red Cross—held a press conference. Wang Yong, the committee's spokesman, said that the villas are owned by the Beijing Olympic Green Park, and have nothing to do with the RCSC.

On the same occasion, the spokesman confirmed another complaint by netizens about the mismanagement of donation boxes in Chengdu, southwest China's Sichuan Province, and called for rectification.

The RCSC is one of China's leading government-sponsored charity organizations. As of the end of 2011, its system covered 2,848 county-level regions in the 31 Chinese mainland provinces, autonomous regions and municipalities, with 980,000 community-level agencies, including Red Cross hospitals.

According to the Red Cross Law of China, the RCSC and its branches are financed by membership dues, donation, property income and government earmarks, and their usage of funds should be supervised by the government.

The RCSC's supervisory committee was set up last December, consisting of 16 people from outside the Red Cross. Its mission is to oversee donation use and management, as well as to investigate public suspicions over the RCSC's work, said Huang Weimin, Secretary General of the committee and partner of the Beijing-based Grandall Law Firm.

Credibility crisis

The supervisory committee's establishment is part of the RCSC's efforts to repair damage sustained during the Guo Meimei scandal in 2011.

On June 21, 2011, 20-year-old Guo Meiling, whose microblog username is Guo Meimei Baby, tossed the RCSC into a credibility crisis by flaunting her wealth, including stylish sport cars and expensive handbags, and using an online identity that suggested she was general manager of a company, Red Cross Commerce.

Netizens related Red Cross Commerce to the China Business System Red Cross Society, a fund-raising group of the RCSC, and speculated that Guo might have embezzled Red Cross donations to make the purchases.

Although Guo was later found not to be employed by the RCSC or any of its affiliates, her boyfriend Wang Jun was a board member of Zhonghong Boai Assets Management, a partner company of the China Business System Red Cross Society. Wang admitted giving Guo a luxury car and handbags. He resigned on June 26, 2011.

The RCSC shut down the China Business System Red Cross Society on December 31, 2011, citing its chaotic financial management.

"The incident has triggered a collective outburst of long-time frustration about Chinese red cross organizations' murky bureaucracy and questionable governance," said Yu Jianrong, a professor at the Chinese Academy of Social Sciences (CASS).

Data from the China Charity and Donation Information Center, a non-profit organization under the Ministry of Civil Affairs, showed that in July 2011, a month after the scandal was exposed, donations to all charitable organizations took a nosedive, declining 50 percent from the previous month.

After Beijing was battered by a heavy downpour on July 21, 2012, the RCSC's Beijing branch called on the public to donate money to victims, but very few people heeded the call. Some netizens posted sarcastic remarks online ridiculing the organization.