The price of corruption
Sometimes the price of corruption is quite transparent. At least for the businessmen who are being ‘forced’ to pay the bribes. Forbes ran an interesting article on corruption issues related to a (privately owned) coal mine in China. The owner estimated the corruption costs at 20% of his total operating costs.
“..The inspection teams who went to check the coal mines, they asked for money. If you didn’t give them money, they would close down the mine,” Lian says. “How much you paid depended on the title. The bureau chief and the office director and the staff all have different prices.”
“The organized nature of such rent-seeking, complete with a price schedule, is hardly surprising. Some Chinese reporters take payoffs not to report on deadly coal mine accidents, and the rule there is that the bigger the news outlet, the bigger the pay-out…The ultimate cost of corruption is in those mines that cut corners on safety and get away with it until the next deadly accident. The official count is that 50,000 miners died in Chinese coal mines this decade, and the real number is probably much higher (keep in mind the journalists paid for their silence).“
Recently China made great efforts to take down corrupt leaders, or as critics say: great efforts to do some window dressing. No matter how you look at it, a lot of alleged corrupt government leaders and their ‘beneficiaries’ were arrested and stand trial. CNN reported that the massive crackdown has implicated millionaires, gangsters, and even police officers. Known as “dahei” (combat triads), the campaign has put the spotlight on organized crime and how it has infested local bureaucracy and businesses through bribery, extortion, blackmail and violence. Police operations started in June 2009, leading to the arrest of over 4,800 suspected gangsters and the confiscation of 1,700 illegal firearms. Investigations implicated many city officials, including police officers.
“The life or death of the (Communist) party depends on whether or not we have a strong will to punish and prevent corruption”, president Jintao stressed. China remains an interesting place to do business. Rio Tinto and Coca Cola were amongst the internationals that got more or less caught up in corruption cases when (former) employees of these companies actually got arrested in China on corruption charges in 2009. Don’t bit off more than you can chew.
http://www.forbes.com/2009/10/30/china-coal-corruption-communist-party-beijing-dispatch.html
http://edition.cnn.com/2009/WORLD/asiapcf/10/21/china.corruption/index.html?iref=topnews
http://www.nytimes.com/2009/09/14/business/global/14coke.html
