Category Archives: Corruption Elsewhere

Danger of Research in Opaque Contexts

Fascinating article from the New York Times on the difficulties and dangers of acquiring information for corporate due diligence in a country with opaque corporate and credit institutions. I especially liked this comment on when crack-downs occur against investigators who do this work:

An arrest like Mr. Humphrey’s is “never about the legal issues. It’s always about who has an interest in suppressing information,” a Western consultant in Beijing said.

That is, who did he piss off.

The article also discusses how these investigators are particularly vulnerable at the moment because of changes to the formal and informal rules governing access to personal and corporate information that would allow one to detect fraud. This probably also needs to be seen in the broader context of a government crack-down on corruption.

This resonates with dangers of conducting research on other opaque institutions—for example, it’s generally well known amongst those who research mafias and organised crime that one should avoid conducting field research in locations where inter-group territorial conflict is underway.

Article link here: In China, The Danger of Due Diligence


The Rise and Fall of Bo Xilai

Solid article by Jamil Aderlini on the rise and fall of both Bo Xilai as well as his father Bo Yibo in today’s Financial Times.  It’s been fascinating to follow this case; and it’ll be interesting to see how it finishes.  There was initially quite a lot of dramatic reporting about its implications for the upcoming leadership transition, but this article’s current assessment is that the transition is currently back on track:

Given Bo’s enormous popularity among ordinary people, an unconvincing official account backed by threadbare evidence could lead many Chinese to assume the entire affair was a stitch-up and Bo was the victim of political infighting. On the other hand, if the case against him is presented too fully, with gory details of corruption, murder and plots, then the public may question how someone so craven and deranged could rise to the top of the political system, and scrutiny may turn to other senior leaders. For now, the once-in-a-decade leadership transition scheduled for October or November appears to be back on track. Some analysts are even saying that without Bo’s destabilising presence, a more harmonious and effective leadership will emerge.

The extreme swings in the careers of political leaders that China’s system produces is quite astonishing.

His father during the cultural revolution…

Bo Yibo was sent to prison, where he endured torture at the hands of his fanatical captors, while Bo Xilai’s mother, Hu Ming, killed herself or was murdered while a captive of Red Guards, according to differing accounts.

But after the death of Mao…

His father was the revolutionary Red Army commander Bo Yibo, one of the all-powerful party elders, known as the “eight immortals”, who controlled Chinese politics from behind the scenes throughout the 1980s and early 1990s.

And Bo Xilai during the cultural revolution…

The chaotic tide soon turned against their children and Bo Xilai was thrown into prison at the age of 17. He spent nearly five years in jail and in Camp 789, a labour camp for children of disgraced senior officials.

In the 1990s…

[I]n 1993 Bo Xilai was named mayor of Dalian, thanks in part to lobbying by his father, who by this stage had taken a keen interest in promoting his son’s political career.

But his father’s death in 2003 set him back…

By most accounts, Bo was one of the people considered at the 17th Communist party congress in 2007 for advancement to the nine-member politburo standing committee, which in effect rules China, and he had his sights set on being named at least a vice-premier at that time. But his father’s death in January that year reduced his political clout, and staunch opposition from many serving and retired officials, including Premier Wen Jiabao, ultimately ruined his chances. Bo was sent out to the provinces – to the steamy south-western metropolis of Chongqing on the banks of the Yangtze River.

And before the Heywood case he was tipped to join the nine-member Politburo Standing Committee…

The death of an obscure British consultant had brought down one of China’s most powerful politicians, a man who had been favoured to ascend to the ruling nine-member Communist party politburo standing committee at a once-in-a-decade power transition later this autumn.

Of course individuals rise and fall in democratic systems (the recent Republican primary!), but the swings are certainly not as extreme and the processes driving the swings are very different.

The full article is available here: Bo Xilai: Power, Death and Politics.


Corruption persists in Hong Kong?

Last week Hong Kong’s Independent Commission Against Corruption (ICAC) charged two billionaire businessmen with paying about $4.1 million in bribes to civil servants in relation to property deals between 2000 and 2009.  Here’s the New York Times:

On Friday, the Hong Kong Independent Commission Against Corruption, or I.C.A.C., charged the two brothers with bribery and misconduct.

The charges accuse the Kwoks and two other men — Thomas Chan Kui-yuen, executive director of Sun Hung Kai Properties; and Kwan Hung-sang, a businessman also known as Francis — of conspiring to provide Rafael Hui, the former chief secretary of the Hong Kong civil service, with the use of two apartments, as well as unsecured loans, in return for unspecified favors.

The case is of particularly interest because Hong Kong’s independent corruption agency is often cited as a model for other countries and Hong Kong is often cited as one of the few countries that have successfully reduced corruption in recent years.  For example, I heard Hong Kong (and Singapore) given as examples of success at a conference last week–see here.   Thus this case could further increase the reputation of its independent agency if it is successful, but I wonder whether, at the same time, it has the potential to partially undermine the city’s reputation as a success case.  I would hypothesise that low-level bureaucratic corruption has been reduced because corruption has been centralized–that a consolidation of political and economic power allowed state institutions to successfully crack-down on low-level (and decentralized) corruption.

New York Times article: Hong Kong Billionaires Charged With Bribery.

Tagged ,

Philippine Chief Justice Removed

A belated post on the Philippine Chief Justice who was removed from office on May 29, 2012. As I noted here, he was impeached for not declaring $2.8 million held in foreign currency. Note that the amount seems to have declined from $28 million to $4.2 million. This New York Times article noted some of the complex politics behind the case (see here):

The case has been politically delicate from the start and is tied up with a feud between the Aquinos and Mrs. Arroyo, who is a member of the House of Representatives but did not support the impeachment. Mr. Corona was Mrs. Arroyo’s chief of staff before she appointed him to the Supreme Court in 2002. She named him chief justice just days after Mr. Aquino won the presidency. Mr. Aquino and his supporters argue the move was meant to squelch efforts to build corruption cases against Mrs. Arroyo and those in her administration.

Mr. Corona faced no criminal or civil charges, though cases could still be filed against him, and he is barred from ever holding public office. Although Mr. Corona faced an impeachment charge of making decisions that were biased in favor of Mrs. Arroyo and her supporters, the Senate never voted on it because after a conviction was obtained on the first charge, which involved hiding assets — the $2.4 million as well as 80 million pesos, worth about $1.8 million, that he had in bank accounts — the trial ended. The Senate then voted, 20 to 3, to remove Mr. Corona from office.

Mr. Corona’s supporters say that Mr. Aquino is trying to consolidate power by attacking the judiciary. The chief justice has also accused the president of favoring the impeachment in retaliation for court rulings that ordered the breakup of an Aquino family plantation, an accusation the president has denied.

I’m seriously behind in reading my newsfeed and posting articles here for posterity (I see this blog as a form of data collection)–I’ve articles starred for reading/posting from back in April!


Corruption amnesties in Malaysia?

I know very little about Malaysian politics but this article in the Financial Times–Malaysian bank chief calls for reform–seemed a bit disingenuous.  Here’s the opening paragraph:

Malaysia must combat corruption and pursue more market-oriented reforms if its economy is to make the leap to higher-income status, Nazir Razak, head of one of country’s biggest banks and youngest brother of its prime minister, has told the Financial Times.

The CEO of CIMB, Nazir Razak, is the son of the second PM of Malaysia, Tun Abdul Razak, and the brother of the current PM, Najib Razak.  They must make him deeply intertwined with the UMNO regime that has ruled Malaysia for the past 40 odd years.  So it seems no surprise, then, that the CIMB chief has called for an amnesty on past corruption.

Nazir Razak has said in the past that Malaysia could look to Hong Kong and other countries where an amnesty has helped to stamp out the issues.

“You could argue that when you do that, you will get a lot less resistance from the vested interests, which is always the problem; then say, the past is the past and we all start from scratch. I still believe that’s what is needed.”

Indeed, a quick glance at his brother’s wikipedia page–here–indicates that he has been accused of corruption in relation to the procurement of defence equipment.   As Rajib Razak indicates (the banker), these are the kind of deals that need to be done to secure relatively smooth transitions.  And his statements signal financial industry endorsement for this.   Given his position (i.e. assuming his bank is a vested interest), one could presumably also interpret this as a threat.  But I don’t know anywhere near enough about Malaysian politics to know whether that is a fair assessment (the family could consist  of factions, I guess).  It seems odd, then, that the FT is presenting him as a neutral figure in this article.


How does a Chief Justice come by $28 million?

This journalist in Malaya suggests that it was a gift from former President Gloria Arroyo:

He has to convince the senator-judges that the money came from somewhere not illegal but neither is it earned.

Is there such kind of money? Maybe there is! In fact, we have long heard two peers of the Chief Justice, one was then Head Magistrate, the other a retired associate justice from the province of Batangas, saying that he was keeping some money for President Arroyo.

Article link: Whose dollars are those?


Burmese Parliament Approves Judicial Corruption Committee

The situation in Burma is evolving at an incredible pace.   The Irrawaddy reported a few weeks back that 500 complaints have been received since a Judicial Committee was established in September 2012 and that the parliament has established a committee to investigate and expose bribery and corruption in the judiciary. The article is, however, a little unclear about when the committee would be formed and who exactly would sit on it.  One to follow.

Article here: Judicial Corruption Inquiry Approved by Parliament.


Former Philippines Chief Justice pockets $28.7 million over 8 years

Wow, prosecutors in the trial of Renato C. Corona, former Chief Justice of the Philippine Supreme Court, have presented evidence indicating that $28.7 million was deposited into 82 accounts maintained by Corona while he was on the court (he become Chief Justice in 2010).  Incredible.  Here’s the New York Times:

Prosecutors in the impeachment trial of Renato C. Corona, the chief justice of the Philippines, presented evidence on Monday that he had deposited $28.7 million into various bank accounts.

According to financial documents presented by the prosecution, Mr. Corona maintains 82 dollar-denominated accounts in five banks in the Philippines.

From April 2003 to December 2011, incoming transactions in the chief justice’s accounts, including deposits and bank transfers, totaled $28,740,497.93, the documents showed. This was when Mr. Corona was earning less than $935 per month as a Supreme Court justice.

I find it very odd that The Philippines has very strict privacy laws relating to bank accounts in foreign currencies.  What’s the rationale for that?

Prosecutors rested their case on Feb. 28, but were unable to access Mr. Corona’s dollar accounts because of strict Philippine secrecy laws regarding bank deposits in foreign currencies.

The account information was permitted to be entered as evidence on Monday because of a provision in the secrecy laws that grants the Anti-Money Laundering Council, a semiautonomous Philippine government agency, access to bank records related to suspicious accounts.

Renato C. Corana was former President Arroyo’s chief of staff before he was appointed to the Supreme Court in 2002.

Certainly the National Police Chief does well for himself, but I wonder if the Indonesian Chief Justice commands anywhere near this amount?

Link to the article: Prosecutors Say Philippine Chief Justice Had $28 Million.


Court rules four months to prosecute corruption

The Supreme Court of India recently ruled that the government must decide within four months to prosecute corruption cases. This has reportedly been prompted by delays in the prosecution of A Raja, the former telecoms minister, who is alleged to have caused state losses of $40 billion in the auction of mobile phone spectrum.  It seems that inaction in the legislature to strengthen anti-corruption laws may have forced a shift to a friendlier institution, the Supreme Court.  This from the BBC:

India’s government must decide within a set time frame whether a public official can be prosecuted for corruption the Supreme Court says.

If a decision is not made within four months, the sanction for prosecution will be deemed to have been granted.


An earlier Delhi High Court ruling had refused to give direction to the prime minister on decisions on such prosecutions.

However, the Supreme Court ruled that filing a complaint under the Prevention of Corruption Act was a constitutional right that required a response within a set time frame.

Justices GS Singhvi and AK Ganguly ruled in favour of Mr Swamy’s petition.

Mr Swamy, who had complained of an “inordinate delay” of more than 16 months in the decision to prosecute Mr Raja, said the ruling was a slap in the face for the government.

Link to the article: India court in key ruling on corruption prosecutions.

Tagged ,

Bo Xilai and the politics of corruption investigations

The downfall of Bo Xilai, the former Mayor of Chongqing (a large city in southwest China), in the past month or so has been fascinating to follow.  This article in the FT by Kathrin Hille provides interesting background on some of the key players and factions: Show of might over Bo’s military allies.  The final paragraphs highlights the role that corruption investigations play in Chinese politics and the leadership transtion:

Sources close to the military say the party bureaucracy has tightened its organisational and propaganda grip on the armed forces since Mr Bo’s replacement as Chongqing leader.

Last week, the Central Military Commission set up an audit steering group which is to examine procurement, construction projects and real estate income in the armed forces, a move seen as a warning to military officers that any disloyalty could be punished with a corruption investigation.

The new committee is also seen as a step by the party leadership to usurp an initiative by a key ally of Mr Bo’s in the armed forces. General Liu Yuan had first spearheaded an unusually high-profile anti-corruption campaign earlier this year.

In January, Gen Liu issued a blunt warning about a “dangerous level” of corruption in the military and pledged to fight it even if it would result in his own downfall.

Shortly after, Lieutenant General Gu Junshan was removed from his post as deputy head of the General Logistics Department in a corruption investigation.

The GLD has long been notorious for corruption in the armed forces because it controls many prized assets and offers more opportunities than elsewhere for officers to make money through kickbacks.

The Communist party has often used corruption investigations to purge officials who had lost support for other reasons. A retired officer who teaches at a military academy says the new audit steering group has the purpose of taking this tool out of General Liu’s hands. “It doesn’t mean he is in trouble. But it reminds us that it is party central who will determine who gets in trouble.”

Update:  This article from The Guardian’s Tania Branigan is also interesting, including quotes from corruption scholars in China and the US: Bo Xilai case shines light on corruption in China.