Fight the hydra of corruption

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By Lin Zhe (China Daily)
Updated: 2009-08-21 07:57

The issue of corruption is always eye-catching. In recent years, environmental administration has become a new field of corruption. Along with the intensified emphasis on environmental issues by the Chinese government, the power of the administration, too, has expanded. Now all important projects have to pass environmental tests, endowing the administration with veto power.

Hence, environmental examination has become a scarce power resource. The scarcer the power resource is, the more the likelihood of corruption. Since the administration possesses the scarce power, everyone who wants to start a project has to beseech them to approve it. Many businessmen are then willing to bribe the administration into giving approval. Thus corruption has become rife in this field.

To curb corruption in this field, the best way is openness in information. The relevant information of the process, outcome and participants of environmental examinations must be released, so that third-party experts can inspect them and report the irregularities. The government should not allow the environmental agencies that are organizationally linked to the environmental administration to undertake environmental examinations. A proper solution is to set up a professional environmental evaluation agency constituted by experts outside the government, which would be commissioned to conduct the environmental examinations.

Another hot spot of corruption is State-owned enterprises (SOEs). The forms of corruption in SOEs include embezzling the money of the enterprises, making use of the opportunities of enterprise restructuring to buy out the enterprises at undervalued prices, or capitalizing on the power in exchange for bribes.

SOEs' corruption is not very surprising, since enterprises are profit-seeking entities and always partake in money-related affairs. Recently many senior executives of several large SOEs were charged with corruption. The reason why senior executives fall prey to corruption is that the administrative structure of many SOEs is, like a pyramid, highly centralized. On the one hand, the head of a firm usually has unchecked and unchallenged decision-making powers. On the other hand, employees of SOEs are often personally bonded with the enterprises and consequently dare not report the corruption.

The corrupt senior executives of the SOEs usually are well paid, but they still indulge in corruption. It reminds us that high salary alone cannot fundamentally curb corruption, because greed is infinite.

Another feather of SOE corruption is collective corruption by the whole management. Since an operation of an enterprise must go through many segments, such as procurement, production, accounting, sales, and so forth, the corruption usually requires the cooperation of many managers or even the entire management. In some cases, the corrupted managers plot together and cover each other.

Corruption is rife in the real estate market, too. The huge profits there give rise to abundant opportunities for rent seeking. Many cases in recent years have revealed that corruption is widespread. Many real estate developers bribe officials in charge of land approval in exchange for the right of land use.

How can we prevent corruption in real estate market? Gaomi county, Shandong province has set a brilliant example. A council made up of representatives of residents has been in charge of determining the use of downtown land. The council has decided to convert a large area in the city center into greens. Tens of gardens were constructed and every citizen could enjoy the green scenery of the pretty town.

How to generally curb corruption is a thorny issue. Corruption happens when the public power goes astray - from serving public interest to angling for the officials' self-interest. Since what leads to corruption is a set of elements, it cannot be prevented and contained by a single method.

There have been four anti-corruption models in the world. In history, authorities adopted draconian laws and stiff penalties to intimidate corrupt officials, or used moral education in the hope that the officials would remain upright and clean. These two models, however, were not very effective and have become obsolete.

The third way is using high salary to encourage officials to be clean. It supposes that a high salary would make civil servants cherish their posts and not commit corruption. But it has two major flaws in China. First, it is only applicable in an affluent society, and China is still a developing country. Second, higher salaries mean more power to the executive branch and its officials.

The most suitable way for China to curb corruption may be bolstering rule of law. The model requires an anti-corruption law and an independent anti-corruption agency. There should be regulations about gifts to officials, the side jobs taken up by officials, property declarations and so forth. China does not have an anti-corruption law yet. Now there are many laws and regulations related to anti-corruption, but they are cumbersome and some clauses even contradict each other. Hence, it is high time we had a comprehensive anti-corruption law.

As early as 1995, a stipulation was made requiring officials to declare their incomes. However, this stipulation has not been seriously implemented, and concealment and falsification are rampant, because there is no investigation on the authenticity of the declarations. Some officials dare not declare their property status because they have too much off-the-record or even illegal incomes.

Though not fully implemented, the stipulation could serve as a starting point. We could investigate the properties declared in the last five years, and punish, or even dismiss officials who have concealed or falsified declarations.

The author is a professor at the Party School of the Central Committee of Communist Party of China.

(China Daily 08/21/2009 page8)