China's Deliberate Non-Enforcement of Foreign Corruption: A Practice That Needs to End

• Author: Gerry Ferguson
• Position: University of Victoria Distinguished Professor, Faculty of Law, University of Victoria, Victoria, B.C., Canada. The author gratefully acknowledges the assistance of Jeremy Sapers who under my supervision co-authored a first draft of this article. This article subsequently underwent significant expansion, revisions, and several re-writes. The...
• Pages: 503-528

China’s Deliberate Non-Enforcement of Foreign

Corruption: A Practice That Needs to End

G

ERRY

F

ERGUSON

*

I. Introduction

Corruption is commonly defined as the abuse of entrusted power for

private gain. It includes bribery, embezzlement by public officials, trading in

influence, and unjustified patronage and nepotism. Global corruption is still

not seen or accepted as a major evil in the eyes of most governments and

individuals even though its negative effects have been frequently noted.

Research shows that corruption increases the cost of doing business (on

average by about ten percent), leads to waste and inefficient use of public

resources, creates and perpetuates poverty, and corrodes public trust by

delegitimizing the state.

1

Ultimately, corruption undermines human rights,

economic growth, and public confidence in government, its institutions, and

the rule of law.

2

These adverse effects of corruption are as diverse as they

are destructive, but this article is not focused on delineating these

consequences in greater detail.

3

For this article, I leave it to the reader to

accept on faith the views of many others, including World Bank President

Jim Yong Kim, who said that “corruption is public enemy number one” in

the developing world and UN High Commissioner for Human Rights, Navy

Pillay, who warned, “Let us be clear. Corruption kills.”

4

Although regional conceptions of what constitutes corrupt behavior may

vary in some respects, there is nonetheless widespread consensus as to what

behaviors constitute the “core of corrupt conduct.” The proliferation of

* University of Victoria Distinguished Professor, Faculty of Law, University of Victoria,

Victoria, B.C., Canada. The author gratefully acknowledges the assistance of Jeremy Sapers

who under my supervision co-authored a first draft of this article. This article subsequently

underwent significant expansion, revisions, and several re-writes. The author also thanks Victor

Ramraj, Law Chair, Centre for Asia-Pacific Initiatives, University of Victoria, for his helpful

comments, Elizabeth MacArthur for her excellent suggestions and additions, and Mary Wallace

for her very helpful research assistance.

1.

C

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OV

B

IZ

, O

RG

.

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CON

. C

O

-

OPERATION AND

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EV

.

,

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ATIONALE FOR

F

IGHTING

C

ORRUPTION

(2014), http://www.oecd.org/cleangovbiz/49693613.pdf.

2. See Keith Thompson, Does Anti-Corruption Legislation Work?, 16

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NT

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L

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RADE

& B

US

. L.

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.

99, 135 (2013).

3. For further discussion of these and other adverse consequences and references to other

sources on these consequences, see generally

G

ERRY

F

ERGUSON

,

G

LOBAL

C

ORRUPTION

: L

AW

,

T

HEORY AND

P

RACTICE

(2d ed. 2017), https://track.unodc.org/Academia/Pages/Teaching

Materials/GlobalCorruptionBook.aspx.

4. See id. at 4, 7.

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international anti-corruption instruments illustrates that there is widespread

international agreement on forms of corrupt conduct that are generally

understood as undesirable and inconsistent with principles of fairness, good

governance, and global economic relations. That international agreement is

found in a number of anti-corruption instruments which bind signatory

countries to implement a range of anti-corruption laws and practices.

5

Unfortunately, ratifying an international convention does not necessarily

mean that a ratifying country will always develop effective laws, policies,

procedures, and institutions to meet its international obligations. In regard

to combatting corruption, a lack of political will to implement meaningful

enforcement mechanisms is the norm rather than the global exception.

In this article, I intend to demonstrate that in the past few years, China

has pursued inconsistent approaches to combatting domestic and foreign

bribery by aggressively and publicly pursuing corruption at home while

totally ignoring the bribery committed by its enterprises and officials

carrying on business abroad. What accounts for China’s non-enforcement

of foreign bribery? In addressing that question, I provide, in Part Two, a

brief summary of China’s recent attempts to reform its corruption laws and

enforcement practices. Part Three provides evidence that China is one of

the most corrupt countries in the world in the context of foreign business

activities when compared to the other countries that are major world

economic actors. Part Four describes China’s very different approaches to

domestic and foreign bribery and suggests that these different approaches

can be explained, though not justified, by reference to certain social,

political, and economic goals of the Chinese Communist Party (“CCP”).

Part Five demonstrates that China’s attempts thus far at combatting foreign

bribery are entirely insufficient to satisfy its international obligations.

Finally, Part Six proposes a few reforms that could pave the way forward,

although the author recognizes that such reforms are unlikely to be

implemented any time soon.

Although this article is primarily about China’s inadequate foreign anti-

corruption enforcement activities, China is not the only major country that

should be criticized for ignoring foreign corruption. Similar failure to

seriously pursue bribery of foreign officials can be documented in many

other leading export countries around the world.

6

This widespread global

failure is also briefly discussed in Part Six of this article. What is striking

5. See generally Organization for Economic Co-operation and Development, Convention on

Combating Bribery of Foreign Public Officials in International Business Transactions, Feb. 15,

1999, http://www.oecd.org/daf/anti-bribery/ConvCombatBribery_ENG.pdf; Organization of

American States, Inter-American Convention Against Corruption, adopted Mar. 29, 1996, S.

Treaty Doc. No. 105-39; Council of Europe, Criminal Law Convention on Corruption, Jan. 27,

1999, E.T.S. No. 173; African Union Convention on Preventing and Combating Corruption,

July 11, 2003, 43 I.L.M. 5; United Nations Convention Against Corruption, Oct. 31, 2003,

2349 U.N.T.S. 42146.

6. See

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RITZ

H

EIMANN ET AL

.

,

T

RANSPARENCY

I

NT

’

L

,

E

XPORTING

C

ORRUPTION

: P

ROGRESS

R

EPORT

2015

(2015).

THE YEAR IN REVIEW

AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW

PUBLISHED IN COOPERATION WITH

SMU DEDMAN SCHOOL OF LAW