The Red Cross Society of China has announced that it will suspend operations in one of its fundraising groups and hire auditors to investigate the branch's alleged misuse of donations.
According to a statement posted on the charity's official website late Friday, the charity will invite auditing institutions to check revenues and expenditures for the China Business System, a group founded in 2000 by the China General Chamber of Commerce with the approval of the Red Cross Society.
The China Business System primarily engages in charity fundraising in China's commercial sector, as well as organizing emergency relief efforts. Funds raised by the group are channeled directly to the Red Cross Society.
The charity will also ask the China General Chamber of Commerce to set up an investigatory committee to probe the group and investigate claims of misused funds.
The Red Cross Society said in its statement that while it does supervise the group's work, it is not involved in the group's internal administration or accounting affairs.
The group faced accusations of misused donations after a 20-year-old woman calling herself "Guo Meimei" online posted photos on her microblog detailing her lavish lifestyle. The woman claimed to be the general manager of "Red Cross Commerce."
Guo uploaded photos of expensive sports cars, designer handbags and a villa, claiming that all of the items depicted belonged to her.
Her posts provoked the ire of the country's netizens, who speculated that Guo might've funded her lifestyle by embezzling money from the Red Cross Society.
The Red Cross Society had earlier responded to the allegations with a statement in which it said that there was no such institution as "Red Cross Commerce," adding that the Red Cross Society does not currently employ anyone named Guo Meimei.
Infuriated netizens then directed their anger toward the China Business System, believing that Guo might have confused the group with the "Red Cross Commerce" group she mentioned on her microblog.
Netizens and media organizations have accused the China Business System of using its charity affiliation as a guise for embezzlement.
Media investigations have shown that the group has cooperative agreements with several businesses and that the group's leaders also work as the heads of several enterprises. The group has been given discretionary power over the use of donations raised through some of its charitable activities.
The group will cease operations until the results of the audit are made public, the society said in its statement.