Wednesday, July 11, 2007

China's New Anti-Bribery Measures & More

Zheng Xiaoyu’s execution yesterday, amid China’s perfect storm of food and drug safety concerns from inside the country and beyond, did not surprise me. He died not just for accepting more than $850,000 in bribes for giving approval to sub-standard drugs. His death serves multiple political purposes, one of which I discussed here.

Corruption in the Chinese FDA is but a small mirror reflecting deep-rooted problems on a ginormous (gigantic + enormous) scale in China. In fact, corruption has become so rampant that even the President knows and admits that it affects the ultimate fate of the Communist Party. Thus, the government has put forth efforts, utilizing conventional and unconventional means to combat corruption among governmental officials, such as Zheng Xiaoyu, the former FDA chief of China. One of the most recent measures taken by the government appears in the form of a joint opinion issued by the Supreme People’s Court and Supreme People’s Procuratorate of the P. R. China. Titled Several Opinions on the Relevant Laws in Dealing with Accepting Bribery (“Joint Opinions”), this document spells out the types of activities to be under watch. It lays out six categories of emerging bribing venues and how they would be combated.

Here, I will try to summarize the Joint Opinions.

The six categories of bribing activities are as follows:

1. Bribery in the form of transactions whereby governmental employees assist a bribing party gain interests by:
a. selling the governmental employees automobiles or houses at prices markedly lower than reasonable market rates;
b. buying the governmental employees’ automobiles or houses at prices markedly higher than reasonable market rates;
c. or other illegal transactions of properties.

2. Bribery in the form of acquiring corporate stocks without monetary payment or investment.

3. Bribery in the form of establishing joint ownership in companies or investments whereby governmental employees assist a bribing party gain interests.

4. Bribery in the form of receiving payback from stock market investments, stock options, or other types of investments entrusted to a bribing party who in return acquires interests due to the governmental employees’ position in the government.

5. Bribery in the form of income gathered from illegal gambling whereby the bribing party gains interests from governmental employees for providing interests in return.

6. Bribery in the form of obtaining employment for family members in return for furnishing the bribing party with conveniences or interests whereby the family members receive salary without actually working.

Government employees engaging in activities listed above would be, theoretically, prosecuted and bear criminal liability. I do not have a lot of sympathy for corrupt officials who abuse their offices of trust and responsibility, but I do share the concerns that Mr. Nicholas Zamiska raised in his WSJ article titled China Targets Bribe Takers, But What About Givers? (subscription may be required.)

Mr. Zamiska states:

But what is less certain is China's commitment to addressing the possibly more-widespread practice of offering bribes, not just the high-profile government officials who take them.

He then quotes a Hong Kong law professor who sheds a little culture light on the reasons behind the Chinese government’s apparent disinterest in going after bribe givers:

"As a policy, the Chinese prosecution -- they normally don't go after the people who bribe. It's been very consistent," says Fu Hualing, an associate professor on the faculty of law at the University of Hong Kong." It doesn't matter if it's the lawyers bribing the judges or the companies bribing the officials."

Dr. Fu says bribery is a part of Chinese society and that the public and the government look at those who bribe with more sympathy than the government officials who accept bribes." If you talk to people on the street, they will think that it's the government officials who should be prosecuted, not the people who bribe," Dr. Fu
No matter how insightful and incisive Dr. Fu is in his observations and assessment of the bribery scene in China, there needs to be, in my humble opinion, a resolve on the part of the government to sew up this gaping hole in the country’s crusade against corruption.

With respect to “bribery is a part of Chinese society,” I keep wondering whether Dr. Fu meant it is something that cannot be changed easily. If people are sick and tired of bribery, as I am sure they are, they might welcome a fresh idea of prosecuting bribe givers. And in response to “If you talk to people on the street,” I’d argue that people on the street 1) do bribe every day; 2) are probably ill-informed of incidents where some people bribe regularly for government contracts or approvals. If provided with a new way to look at curing the country of this cancer, the people might just buy it.

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