On March 2, 2008, Hu Hancheng, deputy director of a division at the National Development Bank, was sentenced to life imprisonment for accepting bribes amounting to 5.5 million yuan. He is the most recent official to have fallen due to corruption charges. This verdict, delivered just before the annual sessions of the National People's Congress (NPC) and Chinese People's Political Consultative Conference (CPPCC), serves as a timely reminder. It is well known that one of the key topics for this year's NPC session is the direction and audit supervision of the four trillion yuan stimulus package.
A closer examination of Hu Hancheng's case reveals some underlying patterns that could help ensure the healthy implementation of the four trillion yuan investment plan.
Firstly, bribe ten thousand yuan and gain a hundred million! How many companies can resist such temptation? Let’s take Hu Hancheng's case as an example. Among the 5.5 million yuan in bribes received by Hu, two specific instances are currently confirmed: 4 million yuan from Henan Blue Sky Group and 1.5 million yuan from Xinjiang Sanlian. These 5.5 million yuan in bribes correspond to approximately 5 billion yuan in loans, roughly equating to one ten-thousand-yuan bribe yielding one hundred-million-yuan return (for instance, Xinjiang Sanlian paid out 1.5 million yuan to secure a 1.6 billion yuan loan). Such an astronomical rate of return far exceeds even the profits of drug trafficking.
Secondly, when those who bribe secure excellent projects and massive loans, how many law-abiding enterprises suffer as a result? In anti-corruption efforts, penalties for those who accept bribes are undoubtedly severe, but the pursuit of those who offer bribes seems too lenient. The cost of bribery is too low while the gains are excessively high. Therefore, to ensure the healthy operation of the four trillion yuan investment, the cost for those who offer bribes must be increased. A "blacklist" for bribery related to the "four trillion" investment should be established, making bribery a high-risk, high-cost endeavor, which would greatly promote fair competition among enterprises.
Xinjiang Sanlian's actions represent the logic of a few Chinese companies who engage in systematic bribery and illegal money-grabbing yet continue to thrive and prosper. In this current period of economic winter, we cannot help but consider that if these black hands reaching towards the four trillion yuan are not severed, not only will precious investments be eroded, but more importantly, the environment of fair competition will be damaged, harming a large number of outstanding companies that compete fairly, delivering a devastating blow to the competitiveness of Chinese enterprises. For this reason, I propose:
1. The government should establish a corporate integrity system "blacklist" — listing all companies that have bribed government officials and all companies that use violence to solve problems, categorizing them into different levels based on severity, addressing the problem at its root.
2. Learn from international anti-bribery experiences and increase penalties for companies that offer bribes. For instance, in late 2008, the U.S. Department of Justice announced that Siemens' total penalty for corruption amounted to $1.345 billion. Another example is Tianjin Dupont, a U.S.-funded company, which between 1991 and 2002, bribed doctors totaling about $1.623 million, earning $2 million in profit, and was eventually fined $4.79 million by the U.S. Department of Justice and SEC. Comparing the penalties imposed on Henan Blue Sky and Xinjiang Sanlian highlights what needs to be done now.
3. Establish a "blacklist" for the four trillion yuan loans or investments, calling for companies like Xinjiang Sanlian and Henan Blue Sky to be included on this list. It should be clearly stipulated that any company that has bribed in relation to government public health investments should not be considered as a partner for the four trillion yuan investment plan.
(Reprinted from the Southern Weekly's March 19 Economic Edition, Original article URL: http://www.infzm.com/content/25642)