China’s New Anti-Corruption “Super Agency” For “Clean” Belt and Road Initiative

IRSHAD SALIM (Updated) — China’s National People’s Congress on Tuesday wrapped up a historic legislative session in March that voted to amend the constitution, scrap presidential term limits and grant President Xi Jinping a mandate to rule indefinitely– his new term ends in 2023.

The two-week annual session also paved the way for Xi to become China’s most powerful leader since Mao Zedong as he pushes through his vision of guiding the country through a “new era” of unrivaled global economic supremacy with his signature Belt and Road Initiative (BRI).

Xi’s trusted allies have been elevated and taken charge of the economy and foreign affairs in the latest leadership shuffle, bringing together a wealth of expertise to clear hurdles the leader could face in his second and successive terms.

During the meetings, delegates also established a powerful new anti-graft agency — the National Supervisory Commission — to boost the legitimacy of Xi’s anti-corruption campaign. It will rank higher than Supreme People’s Court and top prosecutors’ office backed by changes in law that would allow for the detention of both bribers and bribe-takers at the same time.

Another mandate the apex anti-graft body would carry is oversight of more than 100 million government employees and launch of a sweeping reorganization of government ministries and state-run enterprises operating overseas also. Almost all undertakings under BRI are and will be through state-owned enterprises, EPCs and Contractors– even major suppliers, analysts say.

As Beijing pushes forward with its $5 trillion BRI to loop in 65 countries in an ecosystem for a 21st century economic, socio-cultural outreach program, its thought-leaders are concerned with the pitfalls, mainly managing opaqueness, conflict of interests and corruption practices if any at home and abroad.

BRI’s pilot project, the $62 billion China Pakistan Economic Corridor (CPEC) — one of the sixth corridor dubbed ‘southern corridor’ would automatically come within the ambit of  Beijing’s super anti-graft agency and lessons learnt, procedures followed would serve as a benchmark for other BRI corridors it seeks to install in India, Bangladesh, Nepal, Sri Lanka, etc.

CPEC passing through Gwadar in Balochistan will serve as China’s gateway to the Middle East, Africa and beyond being the shortest land-and-sea route Pakistan has offered to its “iron brother” and “all weather friend” for energy and trade in exchange for becoming the center of economic gravity in the region. And that’s happening with Pakistan also tweaking its system to address the challenges ahead.

However, lack of transparency remains core problem for the Communist Party, China observers say, and many Pakistan observers highlight a similar problem in the country — they predict a similar super agency in the country may be in the works, or in the very least existing organizations are being recalibrated, they say.

Related Article: Pakistan and China Have Signed MoU for Eradicating Corruption: NAB chairman

Back in 2016, historic changes were introduced by the sixth plenum of the CPP Central Committee giving Xi a stronger mandate to address social, political and economic issues at home and inherent in BRI with its business and people-to-people outreach program.

Therefore, the formation of a new super agency will see the ruling Communist Party’s anti-graft watchdog, the CCDI, merged with government departments tasked with tackling corruption and coordinate with judicial and procurement bodies and law enforcement departments.

In a rallying speech to nearly 3,000 delegates assembled at the imposing Great Hall of the People that touched on topics from Taiwan, the economy to the Communist Party’s absolute authority in China, Xi also sought to address concerns about the ambitious Chinese development projects abroad, saying they “will not pose a threat to any country.”

“Only those who are accustomed to threatening others will see everyone as a threat,” he added in an address that drew waves of applause from the legislators.

One of the several perceived threats felt by other countries including in Pakistan is lack of transparency, non-standard regulations, specifications, and export of corruption through BRI. China observers say Xi is attempting to placate these concerns as it courts other developing and developed countries to participate in BRI.

While China’s massive global trade infrastructure initiative to revive the ancient Silk Road is drawing huge interest from under-developed and developing nations it is also facing criticism from developed nations fearing that it mainly serves Beijing’s interests and the interests of its state-owned-run enterprises competing for BRI projects as well as other China projects overseas.

Conscious of international criticism of the BRI’s potential to generate huge levels of corruption, China has also focused on “best practices” to mitigate these concerns.

Last May, Xi in his opening speech at the Belt and Road Forum in Beijing, called for strengthening “international counter-corruption cooperation so that the Belt and Road will be a road with high ethical standards.” In response, China’s Central Commission for Discipline Inspection and Ministry of Supervision, together with the World Bank, held a symposium called “Strengthening International Cooperation for Clean Belt and Road” in Beijing in September.

China is right to be worried about the bribery risks within and overseas posed by the major infrastructure development that makes up the BRI (OBOR, once known as One Belt, One Road). Proposed by President Xi in 2013, the $5 trillion program is to be funded primarily by Chinese banks and China-led multilateral financial institutions, that will extend over 65 countries in Asia, the Middle East, Europe, and Africa. Given the limited oversight (by design) and the projected speed of development, as well as the countries and industries involved, businesses working on these infrastructure projects are almost certain to face bribe demands.

According to the 2017 TRACE Bribery Risk Matrix, BRI and other countries show comparable patterns of bribery risk, with one exception: BRI countries tend to demonstrate lower tolerances for the free press whose oversight boosts a country’s defenses against bribery.

Ten BRI countries — Iraq, Ethiopia, Bangladesh, Tajikistan, Laos, Yemen, Uzbekistan, Syria, Cambodia, and Turkmenistan — are among the 25 riskiest countries in the world. (China itself ranks 158th out of 200.) Coupled with overall country risks are the risks specific to the industry: thirty percent of cross-border bribery cases are in the construction and transportation sectors, and some estimate that between 10 and 30 percent of investment in publicly-funded construction projects may be lost due to corruption. Companies involved in the BRI would do well to undertake stringent risk assessment and due diligence and to ensure ongoing training and monitoring in order to navigate around bribe demands, both petty and high level, in these high-risk countries and sectors.

Despite its stated desire for a “clean belt and road,” China’s apparent past indifference to the payment of bribes beyond its borders by Chinese companies is not encouraging. China has never prosecuted a Chinese company for payment of bribes overseas. Nevertheless, by placing itself squarely in the spotlight with its current grand-scale initiative, China has given the question a newly heightened relevance: will the world’s most prolific trading partner finally begin to crack down on foreign bribery?

Francesco Sisci, a Beijing-based China analyst says while many have compared Xi’s rapid expansion of power to that of China’s founder Mao Zedong, the context now is different.

When Mao was in power, China was protected by the Cold War and the Soviet Union. And at that time, the Chinese economy did not have any impact on international markets, he said.

“However, now China is so important. It is the biggest exporter, it is the second largest economy in the world etc., etc.” Sisci told South China Morning Post. “So, whatever he does is bound to have direct and immediate effect worldwide.”

Xi’s drive to smoke out corruption as Beijing fast-racks BRI globally supplements international expectations– the establishment of a new powerful anti-graft agency appears to dovetail Xi’s move to handle potential corruption in BRI projects as an internal issue crucial for exporting his vision worldwide.

Xi used the speech to espouse his vision of realizing the “rejuvenation of the Chinese nation” ─ the “greatest dream” of the world’s second-largest economy.

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