Ethical Corporation is now Reuters Events - LEARN MORE
The full repercussions of the top-level crackdown on corruption by officials are as yet unknown, although side-effects have already emerged
China’s crackdown on corruption, augmented by president Xi Jinping in 2012, is starting to net some really big fish. This was perhaps not how it was supposed to be. Back when the crackdown began senior cadres in China thought it would be a largely cosmetic exercise designed to clean out some low level corrupt officials, grab some headlines, and make the Communist Party look good. And that was exactly what happened – widespread crackdowns on local officials dining on the public tab led to falling profits for restaurants and bars.
The net widened. Shopping trips abroad disguised as “fact finding” and “goodwill” missions have been curtailed, officials with property holdings or fancy cars and watches that far outstripped what they could afford from their official earnings have been cut down to size. There’s obviously been a bit of purging – rivals informing on each other via “whistleblower” hotlines – but no seriously large names. Until now.
Here are two examples of giants recently caught – both big Party names and, clearly, very greedy men. Gu Junshan was a senior military figure in China’s People’s Liberation Army (PLA). As head of the army’s Logistics Division he managed to snaffle away £63m in a scam that in total stole an estimated £3bn. His preferred way of bribing officials was to fill a new Mercedes with gold bars and give them the keys.
Zhou Yongkang, the former boss of China’s super powerful security apparatus, meanwhile, has been arrested for bribery and expelled from the Party in short order. Now many of his former colleagues and family are being investigated and arrested too.
For ordinary Chinese, seeing Xi’s anti-corruption campaign reach so high is popular. There had been mumblings that only small fish were being netted and the big beasts getting away with it all. No longer, it seems. For many years China-watchers have assumed that retired senior officials and those in very high Party positions were immune to the anti-graft campaign. The reasoning was that these were the men (and a few women) who decided China’s future, and smooth handovers of power were essential to the Party remaining in control. To date, and since the Tiananmen Square massacre 25 years ago, Chinese power handovers have been largely behind closed doors and relatively smooth.
However, Xi’s seeming intention to target officials who are also “Emperor Makers” within the Party apparatus could lead to all-out factional war. Many are worried about this – responding to Zhou Yongkang’s arrest, the Global Times, a state-approved newspaper with strong ties to the PLA, commented, with uncharacteristic candour, that high-ranking corrupt officials may join hands to launch a "counter-attack" that could "destabilise Chinese society".
Maybe Xi wants to consolidate power and head off factional fighting by culling the leaders. We cannot be sure and can only really speculate – such is the secretive world of Beijing’s inner sanctum. However, we can see one side-effect of Xi’s newly ramped up anti-corruption campaign – a risk premium has been introduced. Simply put, given the risks of imprisonment and even execution, Chinese officials will now push the price of bribes sky high. Bribe inflation may not be what Xi Jinping envisioned.
Some have seen the writing on the wall and decided to grab their share and flee – more than 75,000 relatively senior communist party members have left the country (out of a total membership of 86 million admittedly). But Xi’s campaign is following them – Beijing claims that it has managed to track down and prosecute nearly 300 corrupt cadres overseas, while countries such as New Zealand (an increasingly popular bolt-hole for dodgy cadres), are thinking of revising their extradition treaties to deport those arriving with ill-gotten gains. The campaign continues.anti-corruption Asia column China China corruption corruption opinion
May 2015, Singapore
Ethical Corporation's Responsible Business Summit Asia is the regional prominent meeting place to find out where business leaders and innovators are headed around their sustainability and CSR strategy - so you can be a leader too.