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BEIJING - Local officials misspent almost $700 million building roads in China in 2005 and siphoned off more than $200 million supposed to compensate farmers for land acquired for highway projects, the government said on Monday.

Of the 166.2 billion yuan ($21.49 billion) spent on China's top 34 road schemes, about 2.16 billion yuan was misused or embezzled, and 3.25 billion yuan was wasted, the National Audit Office said on its Web site (www.audit.gov.cn).

Of the 5.17 billion yuan earmarked for farmers whose land was appropriated in 14 provinces, about 1.64 billion yuan never reached its intended targets, it said.

"Illegal land seizures, embezzlement and continuously delaying compensation for farmers violated farmers' interests," said the report, which was carried in full on the central government's Web site (www.gov.cn).

The auditors also found "serious quality problems" in some highway bridges and said that some project contractors had used inferior materials.

The official Xinhua news agency added the auditors would also look at the books of China National Petroleum Corporation (CNPC) -- China's top oil and gas producer -- and the railway ministry.

"Auditors who moved into the CNPC in mid-March are examining the authenticity of accounts and the duties of top management in making significant decisions," the report said, without elaborating.

Corrupt officials has arouese widespread anger in China, and the government has warned that if graft is not checked it could threaten social stability.

China's chief auditor Li Jinhua found more than $4 billion of government funds were squandered last year, state media said in January, despite repeated nationwide campaigns to rein in corruption and waste.

($1=7.734 Yuan)