Hong Kong: The Business of Corruption
Transcript from Sunday, June
29
Timehost says, "Hello, everyone, and welcome to CNN/TIME's Impact Forum."
Timehost says, "We're about to get started with our interview with Prof. David Newman."
Timehost says, "Please enter questions for Prof. Newman by going to the auditorium. Type "/go auditorium""
Timehost says, "then click on the red question mark."
Timehost says, "It's time to get underway..."
Timehost says, "Welcome, Prof. Newman!"
Timehost says, "It's good to have you."
D_newman says, "Hello."
Timehost says, "Prof. Newman has written two books on Hong Kong and teaches International politics at Lingnan College there."
Timehost says, "He is joining us tonight from Hong Kong, where I guess it's about mid morning?"
D_newman says, "That's correct. It is a gray and rainy day. - done"
Timehost says, "Here's the first question, Prof.:"
Timehost presents question #174 from Chatterer:
We've heard a great deal about fears that corruption will increase AFTER the handover. Is there any evidence that it is already on the increase?
Timehost presents the speakers with question #174 from Chatterer:
We've heard a great deal about fears that corruption will increase AFTER the handover. Is there any evidence that it is already on the increase?
D_newman says, "Yes, recent statistics in Hong Kong indicate an 18 % increase in corruption over the past year."
D_newman says, "Corruption reports are especially increasing within the government. -done"
Timehost says, "How is corruption measured?"
D_newman says, "There is an independent commission against corruption and the statistics are, I suppose, either on reports or on investigations. -done"
Timehost says, "How did Hong Kong bring its corruption problems of previous decades under control?"
D_newman says, "Basically, it created this Independent Commission and promised amnesty to the police for historical cases of corruption."
D_newman says, "In Hong Kong it is an offence to have assets beyond your means and the burden of proof is on the individual to prove where the assets came from."
D_newman says, "An inability to prove where you got the assets is an offence. - done."
Timehost says, "What was the importance of police amnesty?"
D_newman says, "Essentially, twenty-odd years ago when the Commission began, the police went on strike fearful of the implications of investigating their-own corrupt practices."
D_newman says, "Historically, each police station was rumored to be a center of corruption. This has been eliminated in large part. - done"
Timehost presents question #175 from Chatterer:
What happens to the Independent Commission Against Corruption after the handover?
Timehost presents the speakers with question #175 from Chatterer:
What happens to the Independent Commission Against Corruption after the handover?
D_newman says, "The "Independent" disappears. Martin Lee, the leading democrat in Hong Kong, equates this to dropping the word "virgin" before the term "bride". -done"
Timehost says, "For those who may not have seen the IMPACT program this evening, could you explain why corruption is such a concern for Hong Kong? Is it a "Make or break" issues?"
D_newman says, "Going forward, corruption is a big concern because Hong Kong will be a part of China and China is considered by the international business community to be one of the most corrupt places to do business."
D_newman says, "A recent study suggests that Hong Kong ranks in the top 5 free of corruption and China is just above the most corrupt African nations in the study."
D_newman says, "As an international financial center, Hong Kong would face ruin if the Chinese practices are exported to Hong Kong."
D_newman says, "It is already a major concern as to whether the stock exchange will be able to regulate the Chinese listed companies. -done"
Timehost presents question #170 from Sswoody:
Is religious belief a strong factor in Hong Kong, and could that help prevent rampant corruption?
Timehost presents the speakers with question #170 from Sswoody:
Is religious belief a strong factor in Hong Kong, and could that help prevent rampant corruption?
Timehost says, "Have the British done much to bring Western religion to Hong Kong?"
Timehost says, "Apparently Dr. Newman has had a bit of modem trouble; he's reconnecting now."
Timehost says, "A reminder to guests: To ask a question, type "/go auditorium" and click on the red question mark. Then type "/go time" to rejoin the discussion."
Timehost says, "Are you back yet, Prof. Newman?"
D_newman says, "hello, I'm back"
Timehost says, "Great."
Timehost says, "The last question dealt with the impact religious beliefs might have in fighting corruption in Hong Kong. Is that a factor?"
D_newman says, "Religion is freely practiced in Hong Kong, however it's unlikely to prevent"
D_newman says, "corruption flowing in from the mainland. (done)"
Timehost presents question #180 from Chatterer:
We're all talking now as though corruption has not been a problem recently in Hong Kong, but I seem to remember reading lots about organized crime there, so called "triads," who have a tremendous influence on the way business is conducted?
Timehost presents the speakers with question #180 from Chatterer:
We're all talking now as though corruption has not been a problem recently in Hong Kong, but I seem to remember reading lots about organized crime there, so called "triads," who have a tremendous influence on the way business is conducted?
D_newman says, "Yes, triads do operate here in Hong Kong."
D_newman says, "They control prostitution, drugs, and illegal immigration."
D_newman says, "They have also in recent years been more active over the border in mainland China."
D_newman says, "There is a fear that they will become more active after the transition as they link up with corrupt officials from the mainland. (done)"
Timehost presents question #179 from Stamm_time:
Professor, the Commission has cleaned up petty crime, like police kickbacks, but how sure are you that it has eliminated big business corruption?
Timehost presents the speakers with question #179 from Stamm_time:
Professor, the Commission has cleaned up petty crime, like police kickbacks, but how sure are you that it has eliminated big business corruption?
D_newman says, "I'm not sure. There are periodic investigations of major businesses."
D_newman says, "Some have been successful and some have not."
D_newman says, "On June 4th, the ICAC raided a newspaper company for fraudulent estimates of circulation. (done)"
Timehost presents question #167 from Carmeng:
Does the US have any role to play in keeping Hong Kong corruption free as HKSAR makes its transition?
Timehost presents the speakers with question #167 from Carmeng:
Does the US have any role to play in keeping Hong Kong corruption free as HKSAR makes its transition?
D_newman says, "More broadly, the US will have very little role to play in Hong Kong going forward."
D_newman says, "With the Chinese the resumption of sovereignty, that means that Hong Kong's internal affairs are of no concern to the US."
D_newman says, "(done)"
Timehost says, "The argument can be made that a great many American companies do business in Hong Kong, and what happens there may be of great concern not only to the U.S., but the region's other trading partners as well. Why wouldn't this be their concern/"
Timehost says, "?"
D_newman says, "They may WISH to try to make it their concern."
D_newman says, "However much like issues of human rights, Tibet, and Taiwan, the Chinese will not wish to discuss these matters. (done)"
Timehost presents question #165 from Carmeng:
Isn't it in the Chinese interest to maintain a system that will continue to attract foreign investors, i.e. one that isn't completely free of corruption?
Timehost presents the speakers with question #165 from Carmeng:
Isn't it in the Chinese interest to maintain a system that will continue to attract foreign investors, i.e. one that isn't completely free of corruption?
Timehost says, "I suspect the questioner may have meant ""
Timehost says, "IS free of corruption."
D_newman says, "There is no doubt that corruption greases Chinese business practice."
D_newman says, "It unfortunately undermines the rule of law, a level playing field, and American interests, so it is certainly not in the interest of all international business."
D_newman says, "It may be the desire of some in China to prevent corruption in Hong Kong"
D_newman says, "However, this is likely to impede the interests of other powerful interests in China. (done)"
Timehost says, "To follow up this question: Does Beijing permit the corruption within China, and will it see anti-corruption in Hong Kong in its best interest?"
D_newman says, "My answer would be that tolerates a fair degree of corruption."
D_newman says, "Low level corrupt officials are punished while generally higher officials are enriched."
D_newman says, "In Hong Kong, the problem will be that the mainland authorities will be reluctant to"
D_newman says, "punish high ranking mainland officials for their corrupt practices in Hong Kong. (done)"
Timehost says, "Here's a question that cuts to the heart of our discussion:"
Timehost presents question #183 from Marcusbales:
What is the working definition of "corruption" that is being used in these discussions?
Timehost presents the speakers with question #183 from Marcusbales:
What is the working definition of "corruption" that is being used in these discussions?
D_newman says, "I don't have that definition in front of me. But it's any offer of a favor that takes place either to an official or even in the private sector among businessmen."
D_newman says, "A salesman offering a prospective purchaser of goods a trip to Disneyland without revealing to the purchasers employer would be a corrupt practice. (done)"
Timehost says, "Could you give an example of a common Chinese business practice that would undermine Hong Kong's financial health?"
D_newman says, "Bribes are quite common, and by bribes I mean literally the offer of a favor, quite literally the offer of a Rolex watch, tuition for children at US universities, and vacations abroad."
D_newman says, "It's estimated that the People's Liberation Army in China spent more than 1 billion US dollars in 1995 wining and dining business associates."
D_newman says, "(done)"
Timehost presents question #186 from Marcusbales:
When you say low-level officials are punished and higher-up ones are enriched, on what grounds do you assert this? If there is proof, what kind of rule of law allows the higher-ups to enrich themselves at the expense of their subordinates with impunity
Timehost presents the speakers with question #186 from Marcusbales:
When you say low-level officials are punished and higher-up ones are enriched, on what grounds do you assert this? If there is proof, what kind of rule of law allows the higher-ups to enrich themselves at the expense of their subordinates with impunity
D_newman says, "Yes, there is evidence. Large numbers of people, in the thousands, are sentenced to death each year for corrupt practices."
D_newman says, "The vice-mayor of Beijing, when caught engaging in corrupt practices, was sentenced to house arrest."
D_newman says, "Deng's son-in-law after illegally exporting automatic weapons to the US, continues to walk freely (done)"
Timehost says, "I think we've covered the triads, but this question is good...."
Timehost presents question #164 from Carmeng:
Westerners seem to make a lot out of the "unassailable" rule of law of the Brits and the purported completely corrupt Chinese system. Doesn't this set the west up as a little more pristine than it really is? I'm thinking the triads, etc. that were pretty active even under the Brits. What do you think?
Timehost presents the speakers with question #164 from Carmeng:
Westerners seem to make a lot out of the "unassailable" rule of law of the Brits and the purported completely corrupt Chinese system. Doesn't this set the west up as a little more pristine than it really is? I'm thinking the triads, etc. that were pretty active even under the Brits. What do you think?
D_newman says, "The triads have been active. There's no doubt about it."
D_newman says, "Hong Kong certainly does have its faults."
D_newman says, "But, personal safety, the rule of law, and the security of property rights, are probably more highly regarded here in Hong Kong than perhaps anywhere else in the world."
D_newman says, "This is perhaps because we sit so close to China. (done)"
Timehost presents question #168 from Sswoody:
What are the key factors that made Hong Kong a center for international commerce, and do those factors remain in place after the handover?
Timehost presents the speakers with question #168 from Sswoody:
What are the key factors that made Hong Kong a center for international commerce, and do those factors remain in place after the handover?
D_newman says, "There are four factors: rule of law, political stability, respect for property, and geographic location."
D_newman says, "The only one that's permanent is location."
D_newman says, "(done)"
Timehost says, "Of the other three, which are the most threatened?"
D_newman says, "Initially, the rule of law."
D_newman says, "The lack of respect for the rule of law will be evident at 2:30 AM on July 1, when the provisional legislature enacts retroactive laws to punish demonstrators after the midnight ceremony. (done)"
Timehost presents question #182 from Stamm_time:
Professor, press reports indicate that the new leader of Hong Kong was bailed of financial trouble secretly by China in the 1980s. Is that corrupt?
Timehost presents the speakers with question #182 from Stamm_time:
Professor, press reports indicate that the new leader of Hong Kong was bailed of financial trouble secretly by China in the 1980s. Is that corrupt?
D_newman says, "Arms length commercial transactions and even non-arms length commercial transactions are not necessarily corrupt."
D_newman says, "I'm not sure that anyone has suggested that Tung's commercial connections to mainland interests were corrupt."
D_newman says, "My recollection is that at the time it was a private company. (done)"
Timehost says, "Here's a question from the moderator..."
Timehost says, "Which businesses or industries in Hong Kong are the most susceptible to corruption? Which would be the first to leave?"
D_newman says, "Rather than corruption, those that are most susceptible to pressure are those which cannot leave:"
D_newman says, "property companies, franchises, banks -- these have immobile assets."
D_newman says, "Other companies have already moved some of their operations abroad. (done)"
Timehost presents question #189 from Frangm:
Are Westerners leaving Hong Kong now?
Timehost presents the speakers with question #189 from Frangm:
Are Westerners leaving Hong Kong now?
D_newman says, "On net, there is still inward migration from abroad."
D_newman says, "Civil servants who have served for years are leaving, not willing to serve the new sovereign."
D_newman says, "Localization of staff in businesses is a major thrust. (done)"
Timehost presents question #188 from Norton:
How will potential corruption in the new regime affect you personally?
Timehost presents the speakers with question #188 from Norton:
How will potential corruption in the new regime affect you personally?
D_newman says, "I suspect not at all."
D_newman says, "At any time that things get difficult for me, I'm always free to leave."
D_newman says, "Unfortunately, that's not true for everybody. (done)"
Timehost says, "Do you think Chinese rule will have a chilling effect on the academic community there, as it has been suggested has already happened to the press."
D_newman says, "Academic institutions, much like the press, will have pressure exerted upon them."
D_newman says, "Much of this pressure comes from people within Hong Kong who are reluctant to offend the New Emperor. (done)"
Timehost says, "As a final question: What is your prediction? Will corruption undo Hong Kong's trade links in the next decade? Or will China be able to keep it under control?"
D_newman says, "Corruption is likely to make Hong Kong less attractive as a place to do business over the next decade."
D_newman says, "This is moderated by the attraction of"
D_newman says, "China as a market."
D_newman says, "If China becomes less attractive for whatever reason, Hong Kong will face a quick decline if corruption increases. (done)"
Timehost says, "Actually, I'll have one more final question.."
Timehost presents question #192 from Norton:
Do you think that HK people are right not to worry as much as maybe we think they should be worried?
Timehost presents the speakers with question #192 from Norton:
Do you think that HK people are right not to worry as much as maybe we think they should be worried?
D_newman says, "They are worried. When asked if they're worried, they say no."
Timehost says, "And Frangm, I did get your question, but I think that's the topic for another chat. I'll bet Stamm-time could answer it for you."
D_newman says, "However, many people own property abroad, have moved assets offshore"
D_newman says, "and have sought foreign passports as insurance against the risk."
D_newman says, "(done)"
Timehost says, "Well thank you for a thorough discussion tonight. I don't think that this has been looked at fully by the media so far."
Timehost says, "It was good to have you, Prof. Newman. Again, David Newman is a Professor of international politics at Hong Kong's Lingnan College, and his latest book is "Red Flag Over Hong Kong.""
Timehost says, "Thanks for being here, and we'll look forward to talking to you again online in a little more than twelve hours."
Timehost says, "What are your plans for the moment of handover?"
D_newman says, "I'll be sitting on the balcony watching the fireworks and talking to you all online. (done)"
Timehost says, "Until then, have a good night"
Timehost says, "Or, afternoon, as the case may be!"
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