Thursday, 1 March 2007

Corruption Watch: 9,582 commercial bribery cases in 2006

For any developing country corruption is a primary concern and can have a detrimental effect on growth, social unrest and the ability to attract foreign direct investment. There is a considerable academic literature in this area that has tended to show that FDI into China is attracted to those provinces that do the most to combat the problem of corruption.

We will post whenever possible on corruption is China and how government policy changes to adapt to new threats. Western multinationals are not blame free and bribery is rife to the extent that many foreign multinationals take bribery as a necessary evil.

Chinese prosecutors probe 9,582 commercial bribery cases in 2006
BEIJING, Feb. 21 (Xinhua) -- Chinese prosecutors probed 9,582 commercial bribery cases involving public servants in 2006 Xinhua has learnt from the Supreme People's Procuratorate (SPP).

As much as 1.5 billion yuan (192 million U.S. dollars) were involved in these cases, the SPP said.

The SPP's crackdown on commercial bribery had been focusing in 15 areas including land sales, social security funds, medical care, government purchase, the bankruptcy and restructuring of state-owned enterprises.

The investigation of several cases involving high-ranking officials has helped check the spreading of commercial bribery, SPP sources said.

Among them is Zhang Enzhao, former president of the China Construction Bank, who was sentenced to 15 years in prison in November 2006, for taking bribes totaling 4.2 million yuan (about 538,000 U.S. dollars).

Xu Fangming, former director of the finance department of China's Ministry of Finance, was sentenced to 13 years in prison in November 2006for taking bribes worth of 2.15 million yuan.

The values at stake are considerable. What is perhaps more damaging is the effect on the people of China and China's reputation abroad.

2 comments:

ChinaLawBlog said...

Do you think China can end corruption under its present system, or does the system first have to change?

CE said...

Thanks for the comment - this is I suppose the big question and one I believe that China Law Blog has previously addressed on a couple of occassions.

A couple of thoughts though:

In the development literature growth and corruption are linked to legal issues (property rights, rule of law, legal system etc.)

Improvements in this area is a difficult process.

I would ask for recent examples where changing the system has elimated corruption?

Consider how Russia fared? The rapid transition led to corruption and the stripping of national assets on an unpresidented scale. How is the rule of law in Russia? How does it currently compare with China? One only has to look at Thailand, Malaysia and even Japan to see that changing the system does not eliminate corruption.

However, whatever the arguments, corruption is generally considered to be detrimental to the economy and progress does need to be made. Sheer growth will help as China can then throw more money at the problem (larger and stronger agencies etc.).

The problem in China is not necessarily the rules but their enforcement.