Can you have too much of a good thing – in China?

Can you have too much of a good thing – in China?

Article Type: Editorial From: Journal of Money Laundering Control, Volume 18, Issue 3

The Chinese authorities adopting a tough stance to corruption is nothing new. Since the Chinese Communist Party (CCP) came to power, there have been at least six distinct national campaigns against corruption and closely related problems. Chairman Mao, in a speech to the People’s Liberation Army in October 1947, emphasised, as one of his three main rules of discipline, that no one should misappropriate or derive personal advantage from people’s property. This has been a well-trodden path by Chinese “sages”, and it is possible to find offences relating to corruption in some of China’s earliest laws. The CCP has always been sensitive to perceptions that those in power act in their own self-interest. Internal CCP committees have long been authorised to search out and “correct” self-dealing and corrupt practices. The situation in China has – as in most countries – been complicated by those in positions of authority – at all levels – acquiring wealth in the name of another and, especially in China, that of their family. Indeed, in a recent research study, educated businessmen canvassed for their views considered that benefiting their families, even if this violated the provisions in the Companies Act, was just good Confucianism.

The current crusade against corruption has its roots in the concern expressed by China’s previous President Hu Jintao. He was particularly worried about China’s international standing and did much to project China as a responsible participant in various international initiatives against corruption. Under his successor President Xi Jinping, the crusade has become far more wide ranging and thorough. Indeed, such is its ferocity that some inside and certainly outside China think that it may have more to do with purging the Party than the searching out of corruption per se. In its early stages, under President Hu, those targeted were often exposed as a result of some other criminal conduct and, indeed, in some instances, possibly due to their relationship with organised crime. While there have been high-profile individuals punished – even executed – in recent months who have close relationships with the “triads”, the present campaign is even more focussed. This is not to say that those at risk are not guilty of corrupt practices. What has concerned commentators, mostly within the “legal” establishment in China, is that the majority of the more high-profile targets have been primarily dealt with under the relatively comprehensive apparatus of Party discipline, rather than the ordinary criminal law and the courts. The efficacy of investigations and disciplinary action by the Department of Supervision within the Party has proved more efficient and, of course, predictable than conventional criminal proceedings.

That deals involving the public acceptance of responsibility may have been reached behind close doors, in return, for a more benevolent posture to family members is not entirely without foundation. However, the practical problems that the Chinese, whether through their administrative system or the more traditional criminal justice system, have in securing co-operation, particularly from foreign countries, should not be under-estimated. It is true that certain governments, including Canada, have been prepared to extend legal assistance to the Chinese authorities both in regard to accused individuals and their ill-gotten gains. However, most have not – many calling in aid the justification that the Chinese are reluctant to rule out the use of the death penalty. Of course, given the political imperatives, even the British and Americans have been prepared to provide informal assistance and intelligence. The Chinese in the past have also considered initiating civil recovery proceedings in foreign jurisdictions to recover “stolen” assets and even bribes. Given the role China played, however, in promoting the United Nation’s Convention Against Corruption, which, at least in form, greatly extends the scope for international mutual assistance, it is sad it has reaped relatively little co-operation in return.

There are those who consider that the government’s current campaign may not, even if taken at face value, be entirely a good thing for China. Business in China relies a great deal on relationships and, in the current climate, no potential investor or business partner in or outside China can be entirely confident that the persons that they are dealing with are going to remain viable for long. Business deals are suffering and there is a climate of caution. Added to this, many who have benefited by virtue of their parent’s ability to fund an expensive education overseas are not returning to China. There is uncertainty within the Chinese financial sector which has long regarded compliance as little more than cosmetic, that those who remitted monies overseas for officials might be left carrying the can. It is also the case that the relevant laws in China are not particularly clear or for that matter applied consistently. There is also concern that exposing so many senior people as corrupt might do disproportionate damage to the reputation of China. For example, Professor He Jiahong, a distinguished criminal lawyer at Renmin University and a leading author, has called for an amnesty – something which was referred to as a possibility in an editorial in this journal many months ago (Rider, 2012). As another editorial stated in the influential Chinese magazine, Caixin:

[…] though many dirty officials have been caught in the past two years, the nation is far from rooting out the scourge […] for every dirty official caught, another takes his place.

Barry Rider

Reference

Rider, B.A.K. (2012), “A tale of two cities!”, Journal of Financial Crime, Vol. 19 No. 1, pp. 4-5.