A shell company in Haikou, Hainan Province, has won bids for local government procurement items on several occasions in four months after its registration, despite not appearing to have the relevant qualifications.

The Haikou-based Xinghai Lida software development company won the bid for a Haikou People's Hospital's procurement project in May despite asking 5.9 million yuan ($1.5 million) while several renowned enterprises asked 4 million yuan, Xinhua reported.

According to the bid announcement, bidders for the project were required to hold a software enterprise qualification certificate and have a good record of paying social security funds and business tax.

However, the company never received a software enterprise qualification certificate and had never paid social funds for its employees before June this year. Nor has the company paid any business tax up till the end of this May, according to the Xinhua report.

The company was later found to have no office address or contact information.

This same company has also won bids for the Haikou Women and Children Hospital's procurement projects twice in October and December, according to Xinhua.

"The shell company's success in winning bids might be because of the local government's unwillingness to make its information public," Wang Zhenyu, a deputy director at the Public Decision-making Research Center at the China University of Political Science and Law, told the Global Times.

According to Wang, many local governments do not execute the Government Procurement Law, which requires a transparent process during government procurement.

Sometimes, local government officials will set up a shell company to gain profits during the government procurement process, Wang said.

"The first thing is to make the government information public, and then anti-corruption departments should also pay more attention to government procurement," Wang suggested. 

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