Tag Archives: China

Guest Post: The Alibaba IPO–Open Sesame Time for Anticorruption?

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Dieter Zinnbauer, Senior Program Manager for Emerging Policy Issues at Transparency International, contributes the following guest post on the pending Alibaba IPO:

The anticipated listing of Alibaba, China’s rising corporate tech star, on a U.S. stock exchange is likely to be the IPO of the year. The business press is awash in speculations about the financial and economic impact of this much hyped IPO. Will this listing also create a big splash in the fight against corruption? What will be the impact on business integrity when this fast-growing Chinese tech company lists in the US and, as a result, directly subjects itself to the Foreign Corrupt Practices Act (FCPA) and other corporate governance rules?

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China’s Anticorruption Crusade Is Reaching a Turning Point

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Xi Jinping is 18 month into his presidency and almost as long into his anticorruption crusade in China. As the Wall Street Journal noted as early as May 2013, anticorruption purges are hardly new in China, but President Xi seems to be pursuing his anticorruption drive with unprecedented vigour and commitment. Zhou Yongkang, the newest and arguably most prominent casualty of the purge, is evidence that this time is different. Shannon Tiezzi recently made the same underlying point in a piece in the Diplomat. Ms. Tiezzi takes issue with the oft-repeated claim that President Xi is only using anticorruption to weaken political rivals and promote his allies; she points out that while President Xi is indeed using the purge to his advantage, political infighting couldn’t be his sole motivation, since if it were “he would likely be winding down the campaign now.”

I don’t disagree with Ms. Tiezzi’s point. President Xi’s anticorruption drive–the centerpiece of his tenure so far–has undoubtedly gone further than others before him. More than 182,000 party members, including 17 high-ranking officials, have been punished for corruption since the beginning of his presidency. Yet despite this progress, recent signals suggest that his campaign might be significantly curtailed in the near future.

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Social Media and Anticorruption Reform: When Does Crowdsourcing Work?

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Is social media the next great tool in fighting corruption, or is its role more limited? As Matthew noted in his last post, some anticorruption activists have used blogs and other online platforms to circumvent traditional media, and there’s some limited evidence they may have had an effect. Perhaps even more exciting, the launch and the early successes of the website I Paid A Bribe, started by an Indian nonprofit, suggested that the egalitarian internet could take advantage of “crowdsourcing” approaches to provide information on corrupt activities, disincentivize bribe-taking, and educate the public. Anticorruption reformers in other countries took note of I Paid A Bribe’s achievements, launching their own country-specific spinoff websites.

But those websites have not been universally successful. One of the most notable recent disappointments has been in China, where I Paid A Bribe and similar crowdsourced antibribery platforms failed, and ultimately folded. Recent research by Yuen Yuen Ang examines the short-lived existence of China’s crowdsourced antibribery platforms and offers some explanations for why the Chinese efforts failed to accomplish their objectives. While she stops short of offering broader takeaways on the role of social media in combating bribery, we can draw some conclusions using her work as a starting point. Broadly speaking, her conclusions suggest that social media is only effective in combating bribery where an adequate educational, social, and political framework exists to support its use. Continue reading →

Personal Financial Disclosure by Chinese Officials: Will China Finally Get Serious?

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Matthew noted yesterday how continuing revelations of the vast wealth some Chinese officials have accumulated put China’s leaders in a bind.  If they don’t curb corruption, they risk undermining their legitimacy; on the other side, so many senior individuals are involved that a serious crackdown could ignite a power struggle.

An important gauge of the direction the leadership will choose is how vigorously it enforces a directive issued in November 2013 requiring public servants to disclose details about their and their family members’ finances.  Requiring senior officials to reveal their personal finances can be a valuable tool in the battle against grand corruption, as one of China’s East Asian neighbors can testify.  In the Philippines, the Statement of Assets, Liabilities, and Net Worth officials must file has been central to exposing the corrupt dealings of a president and a chief justice as well as revealing a nest of corrupt tax collectors. Continue reading →

Reflections on the ICIJ’s Expose on Chinese Princelings’ Offshore Holdings

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For those who haven’t seen it already, last month the International Consortium for Investigative Journalists (ICIJ) released a highly detailed report on the extensive offshore holdings of China’s “princelings” (close relatives of China’s political elite), and other relatives and close associates of the leadership. It’s worth a read. I doubt anyone who follows China even slightly will be terribly surprised to learn that friends and family of the Communist Party elite have stashed billions of dollars in shell companies and offshore bank accounts, but the level of detail—and the naming of names—is impressive. And while nothing in the report directly indicates that the money is the product of corruption or other illegal activity, as the saying goes, where there’s smoke…

A few quick thoughts on the report: Continue reading →

Turkish Turmoil and Politically-Motivated Anticorruption Enforcement

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At the Project Syndicate website, Dani Rodrik had a very nice commentary last month about the recent power struggles in Turkey, which have included prominent anticorruption actions against senior government figures. These actions have been brought by prosecutors sympathetic to one faction (the Gülenists) against high-ranking figures affiliated with Prime Minister Erdoğan and his party (the AKP). For people like me, who know next to nothing about Turkey, Rodrik’s post provides a nice overview (albeit one with a strong editorial slant). In addition, one passage in Rodrik’s post caught my attention, as it seems related to a common pattern, and problem, in the world of anticorruption enforcement:

The Gülenists have dressed up their campaign against Erdoğan in the guise of a corruption probe. No one who is familiar with Turkey would be surprised to learn that there was large-scale corruption surrounding construction projects. But the corruption probe is clearly politically motivated, and Erdoğan is right to question the prosecutors’ motives. The current round of judicial activism is as much about rooting out corruption as previous rounds were about [other alleged malfeasance] – which is to say, not much at all.

This seems to be a frequently recurring pattern: (1) one party or faction launches an aggressive anticorruption probe against a rival party or faction; (2) it is almost certainly true that most or all of the targets of the corruption investigation did in fact engage in corruption—often serious corruption; yet (3) it is also often the case that those pushing the investigations are doing so not only, or even primarily, out of genuine concern about corruption, but rather as a way to damage a political rival. The most familiar manifestation of this pattern occurs when a new party or faction comes to power and launches corruption investigations against its predecessors or main rivals, as part of what may amount to a purge (or, more mildly, an effort to consolidate power). There’s a plausible argument that this is what’s happening right now in China. The Turkey situation is a bit different, in that a faction that does not currently control the government nonetheless has enough support within the justice system (police, prosecutors, judges, etc.) to launch politically-motivated corruption probes of government officials. Continue reading →