By Ben Blanchard
BEIJING (Reuters) - China's cabinet criticized the powerful Railways Ministry on Wednesday for lax safety standards and poor handling of a crash in July which killed 40 people, and said there may be prosecutions though it remained committed to high-speed rail.
The government has struggled to address public fury over the accident near the booming coastal city of Wenzhou, when a high-speed train rammed into another one stranded on the track after being hit by lightning.
Premier Wen Jiabao vowed that the investigation would be thorough and transparent -- though the cabinet's report was pushed back from mid-September for technical reasons and to give the team more time to pour over documents.
An account of the conclusions of the investigation presented to Wen at a cabinet meeting said the accident was due to serious design flaws in control equipment and improper handling of the lightning strike, broadly in line with initial findings.
The Railways Ministry "did not properly handle rescue efforts, did not issue information in a timely manner and did not correctly address public concerns, which created a bad influence in society," the central government said in a statement on its website (www.gov.cn).
The accident prompted a huge public outcry on microblogging services, with users expressing anger at the perceived poor official response and pulling apart accounts of the crash and the rescue efforts.
Seeking to assuage public anger, the government fired three mid-level railway officials a day after the crash.
The report detailed 54 officials who would receive administrative punishments, and said more serious penalties could follow for them.
"Legal authorities are currently conducting an independent investigation in accordance with the law into whether or not these relevant responsible officials committed crimes," it said.
It laid particular blame at the door of former railways minister Liu Zhijun, though he was dismissed months before the crash, in February, over corruption charges that have not yet been tried in court.
Liu "has the main leadership responsibility for the accident," it said.
Current minister Sheng Guangzu would have to present a "thorough self-criticism" to the cabinet, it added, demanding the ministry and companies which made the faulty control systems drastically improve the way they operate.
"Completely upgrade the safety management level of the railways, especially when it comes to building and operating high-speed railways," it added.
Microbloggers were quick to denounce the findings, suggesting the government still has a long way to go to restore public trust.
"This probe will become an international joke," wrote "hjerryzhu" on the Twitter-like Sina Weibo.
"The Communist Party has become a byword for hypocrisy, lies and violence," said "kaherd."
The government has said it would suspend railway project approvals and launch safety checks on equipment to address anger after the Wenzhou crash on what was a new high-speed rail line.
The ministry plans to cut its annual railway investment by 15 percent in 2012 to 400 billion yuan, state media said last week.
The ministry also faces soaring debt. In August, it said its total liabilities at the end of June were 2.1 trillion yuan ($330 million), up by nearly half from the end of 2009 and bringing its liability-to-asset ratio up to 59 percent.
However, the government said it remained committed to building high-speed railways, which China plans eventually to run into Russia and down to Southeast Asia.
"High speed railways improve people's ability to travel and promote economic development. Building and developing high speed railways is the correct course," it said in a separate statement.
($1 = 6.3226 yuan)
(Additional reporting Zhou Xin and Sally Huang; Editing by Robert Birsel)