Thursday, 5 January 2017

Corruption Then and Now

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?



Electro-Kevin said...

Don't worry. A generation hence such corruptions will be well and truly part of our own culture.

Anonymous said...

As every Chinese knows but is too afraid to say inside China without adequate protection, "Mr Xi's much vaunted anti-graft drive" is merely Mr Xi's cunning plan to eliminate his adversaries and direct all the corruption and graft towards himself.

CityUnslicker said...

Anon - well, it is slightly more nuanced that that. There are several factions in China that rule the country and the party. They vie for power, when one faction takes over they take out the senior members of the other factions. Xi has done this more than his predecessor and has called it an anti-corruption drive. The effect of which is much as you say. Long-term I still think the Li family remains the most powerful and will try to re-assert itself via its control of the Red Army. Hence I worry Xi maybe forced to action in the South China Sea or Taiwan as part of the internal shenanigans to reduce his influence.

Blue Eyes said...

Always the optimist EK!

There is nothing inherently wrong with paying more to get a better/faster service... as long as that extra service is open to all and the money doesn't get pocketed. The UK passport office charges more for an express service. The way to root out corruption is to liberalise and become smarter. If your bureaucracy looks like India's then is it any wonder people feel the need to facilitiate?

Steven_L said...

The most I've ever been offered in 10 years is a can of coke. In hindsight perhaps I should have been more proactive when I had the chance.

"Well we've only had these four complaints over the last two years and it looks like none of my colleagues have bothered to look into them. Personally I don't see why we shouldn't get the details of all your purchasers from the Land Registry so we can write to them and ask them about how they were sold these investment plots of greenfield land. I think I'm going to go away and have another read of these fair trading regulations and maybe come back on Wednesday. You'll probably want to give me xthousand reasons not to do it, but I'm afraid it's going to be my decision."

Yep, I was such an idealistic fool in my 20's, letting the lawyers get all the spoils.

Anonymous said...

Losing at rigged card games is ingenious, you say.

Do you really think that you won those memorable rounds of golf with business partners purely through talent?

Electro-Kevin said...

Blue - that's very true. I had been looking through the wrong end of the telescope. Bureaucracy begets short cutting.

Bill Quango MP said...

Could be a good business opportunity.


Blat-App links you and other influential, wealthy, Politically connected individuals together. Search Blat-App by service sector and find thousands of key apparatchiks and state employees who can assist you with your business.

-Top In App purchases
- Payment scale table
- bitcoin converter
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- Baksheesh-App
- CyberGraft

Anonymous said...

+ contactless payments! Just wave the i-phone in the general direction. (Always best to keep fingerprints off).

With a little map that highlights bent bureaucrats in your neighborhood, just click and one will be round in a jiffy. Kick-backeroo.

Engineered by the best Indian software coders. Adapted from Uber, (which already knows all the dodgy players).

Anonymous said...

Thing about corruption in Asia is everybody gets a shake of the stick; rickshaw driver to president. like taxes just build it into your business model. Here, only the presidents men get away with it, while the proles are banged up “as an example to others”

Electro-Kevin said...

"In essence, in spirit, though not brick-by-brick, the European Union is a wickedly communist project and narrative.
It seeks not by robust Nazi embrace but by lower-middle class fanciful inter-communal smooching to entomb us in an inescapable future. Don’t we have enough problems now surrounded by moribund Remoaners and proper British Law gone AWOL? Just think how more difficult in years to come with even more layers of bureaucratic nonsense smothering our escape!"

I bring this to you as it seems quite apposite today.

I stand by my first. We shall soon be as *bureaucratic* as, say... India !

(We are not leaving the EU. Something is about to thwart the activation of A50. The public have been softened up for it.)

andrew said...


A50 has been active for some time

Anonymous said...

Having taken part in such jollys, I can honestly say if you must do it, do it where the perks are worthwhile. South China yes. Russia or North China ...err.

Of course if you are within the EU, forget it. An extra Belgian beer or odd sausage.

Roll on Brexit and the bounties that will bring.

CityUnslicker said...

I have some legendary stories for this, but sadly they are suitable only for the pub and are not to be committed to print!

Raedwald said...

Openness, transparency and revenue.

The sooner the British Empire honours are outsourced to KPMG, Crapita, PwC or G4S th better - then they could set up online purchasing system for open fees, say £100k for a KB down to £15k for an MBE, so hairdressers and nail painters other than those that have worked for Prime Ministers' wives can get a chance of a Damehood or CBE as well.

The government could still give the things away free to the corrupt, spivs, shysters, crooks and arselickers and these could be distinguished by the post nominal (F), e.g. Doris Flagrant OBE(F)

Of course this would leave the only honours worth having - CH, OM, Garter, Thistle etc - as the exclusive gift of the sovereign, untouched by the filthy and odious hand of corrupt politics. As they are now.

Raedwald said...

Uhm, as a postscript, my grovelling and humble apols to any decent, deserving recipients of BE honours, military MBEs etc. I'm really sorry your / your friend's, family's gongs have been so devalued by those grasping corrupt shits.

Anonymous said...

"The words of the song"? Oh, Nick, do you not remember the News of the World? It's said that Murray Sayle invented the phrase when he worked with Duncan Webb.