Friday, September 4, 2009

Politics Permeates Anti-Corruption Drive in China - Part II

By DAVID BARBOZA Published: September 3, 2009 Many officials come up with ever more imaginative ways to gain wealth, like setting up private foundations to accept bribes or encouraging entrepreneurs and companies to bankroll the education overseas of family members. Weeks after Huang Guangyu was named the second richest man in China by Forbes last October, the Chinese government said he had been detained on corruption charges. “It’s no longer bags of cash,” says Violet Ho, an investigator working for Kroll, the risk consulting firm. “There are sophisticated games going on.” Chinese lawmakers are considering a law that would give investigators larger powers, including criminal penalties on the “bribe-taking relatives and spouses” of corrupt officials. No one knows how many Western companies participate in corruption here or how often, but many multinational corporations are worried, particularly American companies that must comply with the Foreign Corrupt Practices Act, which forbids bribing foreign officials. This year, Morgan Stanley dismissed a real estate executive in Shanghai after discovering he might have violated the bribery law. And in 2007, Lucent Technologies agreed to pay a $2.5 million fine after the United States government accused the company of violating the act. In a filing, the Justice Department said Lucent spent more than $10 million from 2000 to 2003 to bring 1,000 officials to the United States. The officials were supposed to visit Lucent operations, but instead Lucent often paid for them to travel to Las Vegas, Disneyland and the Grand Canyon. Still, when major corruption cases occur, the origins and nature of the cases are often shrouded in mystery. In 2006, when Chen Liangyu, Shanghai’s party secretary and a Politburo member, was ousted, many experts said there was evidence that he — a major regional figure — had lost a power struggle with leaders in Beijing. Many China experts believe the Rio Tinto case was politically motivated because Rio Tinto battled with the government steel industry over iron ore prices. Those caught in the party’s campaigns are usually humiliated and denounced for taking bribes, leading “decadent lifestyles” and, sometimes, for taking multiple mistresses. But so many officials are engaging in the same practices that in Hong Kong there is a cottage industry in books that detail the private lives of corrupt officials, with titles like, “The Sexy Record of High-Ranking Communist Party Officials,” “Power and Money: How They Steal,” and “Shared Mistresses: Lust and Caution Among Chinese Officials.” Whatever the public outrage, many experts say they doubt corruption will go away anytime soon, largely because China does not have an independent police force or judicial system. There are limits to where the party is willing to go. When President Hu’s son became embroiled in a corruption investigation in the southern African nation Namibia involving a Chinese company he once controlled, Beijing asked Chinese Internet portals and state-run outlets not to make any mention of the case. Analysts say there is another reason change will come slowly: because officials seek power precisely so that they can form alliances and make the decisions that will eventually make them rich. “It’s now a recruiting tool,” Professor Pei says of the promise of future graft. “Corruption is the glue that keeps the party stuck together. Getting rid of it is not possible as long as they keep this system.” Source : The New York Times / The International Herald Tribune

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