On March 2, 2008, Hu Hancheng, deputy director of the department at the National Development Bank, was sentenced to life imprisonment for accepting bribes totaling 5.5 million yuan. He is one of the latest officials brought down for corruption. This verdict just before the Two Sessions has a cautionary significance. As is well known, one of the key issues for this year's People’s Congress is the direction and audit supervision of the four trillion yuan investment.
By carefully examining Hu Hancheng's case, we can uncover some underlying logics that could help ensure the healthy operation of the four trillion yuan investment.
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. Out of the 5.5 million yuan in bribes Hu received, two clear instances have been identified: 4 million yuan from Henan Blue Sky Group and 1.5 million yuan from Xinjiang Sanlian. These bribes were related to approximately 5 billion yuan, roughly corresponding to a ratio of one ten-thousand-yuan bribe for every hundred-million-yuan benefit (for instance, Xinjiang Sanlian gave 1.5 million yuan to secure a loan of 1.6 billion yuan). Such high returns on investment far exceed even the profits from drugs.
Secondly, when those who bribe obtain excellent projects and huge loans, how many law-abiding enterprises are harmed? In anti-corruption efforts, the punishment for those who accept bribes is severe, but the accountability for those who offer bribes seems too lenient. The cost of bribery is too low while the gains are too high. Therefore, to ensure the healthy operation of the four trillion yuan investment, it is necessary to increase the costs for those who offer bribes. A "four trillion" bribery blacklist should be established so that bribery becomes high-risk and high-cost, greatly promoting fair competition among enterprises.
The behavior of companies like Xinjiang Sanlian represents the logic of a few Chinese companies. They strategically engage in bribery and illegal money-making schemes, yet they continue to thrive and prosper. In the current economic winter, we cannot help but consider that if these black hands reaching towards the four trillion yuan are not cut off, 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. This would deal a devastating blow to the competitiveness of Chinese enterprises. For this reason, I propose:
1. The government should establish a corporate integrity system "blacklist" — including all companies that bribe government officials and all companies that use violence to solve problems on the blacklist, and establishing different levels based on the severity of offenses, addressing the problem at its source.
2. Learn from foreign anti-bribery experiences and impose heavier penalties on companies that offer bribes. For example, at the end of last year, the US Department of Justice announced that the total penalty for Siemens' corrupt practices amounted to $1.345 billion. Another example is Tianjin Dupont between 1991-2002, where doctors were bribed a total of approximately $1.623 million, resulting in a profit of $2 million. Eventually, the company was fined $4.79 million by the US Department of Justice and SEC. Comparing the penalties imposed on Henan Blue Sky and Xinjiang Sanlian shows 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 "blacklist." It should be clearly stipulated that any company involved in bribery related to government public health investments should not be considered as a partner for the four trillion yuan investment.
(Reprinted from the Southern Weekly Economic Edition on March 19th. Original article URL: http://www.infzm.com/content/25642)