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Corruption Then and Now

Thursday, January 5, 2017 1:45
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B4INREMOTE-aHR0cHM6Ly8zLmJwLmJsb2dzcG90LmNvbS8tSHJVMDBjQkpTcHMvV0c0QlpZeVlPUkkvQUFBQUFBQUFGRmsvNlZtM2E3b3Z3OE1tcWNwR0hsdnFqU1BwVGhkTXVMdnN3Q0xjQi9zMTYwMC9jYXNoLmpwZw==An entertaining FT piece on corruption in China, which sets out how Mr Xi’s much vaunted anti-graft drive has had only the most superficial results, i.e. driving it into ever more subtle modes.

Businesspeople complain that their bribery costs have actually risen along with the greater risks facing corrupt officials, many of whom now demand backhanders paid in foreign currency directly into offshore bank accounts. Some entrepreneurs have concocted elaborate schemes to funnel cash to the right officials. One businessman in a provincial Chinese city hired an American professional card shark to play private high-stakes card games with party bigwigs and intentionally lose to certain players …

There was an earlier article on the same subject by Martin Wolf, also in the FT, last month:

If a market economy is to be combined with reasonably non-corrupt government, economic agents need legal rights protected by independent courts. But that is precisely what a Leninist party-state cannot provide, since it is, by definition, above the law. The party-state may govern by law but cannot be governed by it. Thus, its agents are above effective legal recourse from private citizens.

That’s the irredeemable philosophical aspect neatly stated:  but I am almost equally intrigued by the practicalities – these rigged poker games, it all sounds very ingenious.

I have never done business in mainland China, but I did spend a memorable year in Russia.  As I was operating under US anti-bribery laws at the time, I needed to become acquainted with the subtleties of ‘expediting’ and ‘facilitating payments‘, which could be legitimate in certain circumstances, ahem.  (You’d even get a reciept …)

One day we took a call from a company in Canada that was unknown to us, pitching a business development proposition in Russia that seemed as though it could be right up our street.  So when I was next bound for corporate HQ in the States, I detoured via the Canadian firm to hear their story.  It turned out not to be as interesting as it sounded; but over dinner the conversation took a different turn.  My host named a handful of senior Russian counterparts he thought I probably did business with (he was correct) and said that he knew I would have difficulty in seeing them right, what with the pesky (US) Foreign Corrupt Practices Act and all.  However, he said, as a Canadian he did not labour under such constraints, and proffered me a smart brochure, complete with photos and potted CV’s of all the Russians he claimed were ‘on his books’ and ‘open for business’.

In the words of the song, I made my excuses and left.  Twenty years on, in the age of social media, his entrepreneurial modern equivalent would presumably be flashing an app on his ‘phone …  Fixr?  Backhandr?   Something of that sort, I imagine.  PayPal OK?



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