Anti-corruption efforts in China
While steps to increase transparency in Chinese businesses are welcome, commitment to due legal process is still questionable, write James Macdonald and Benjamin Harrison
In recent months the headlines have pointed to a renewed dedication on the part of China to get to grips with the issue of business crime in the country.
August brought the potential prosecution of 26 individuals linked to peer-to-peer lender Ezubao for fraud and illegal fundraising via an alleged Ponzi scheme. Earlier in the summer we saw the arrest of the architect of the Fanya Metals financing scheme. Both frauds are estimated to have involved funds stretching to billions of US dollars.
Taken only at face value, these developments might suggest China has finally made some genuine progress in clamping down on the corruption, bribery, and tax evasion that has blighted the country’s reputation for many years. That certainly seems to be the political line emphasised by the Chinese leadership.
However, it was reported only a few months ago that, notwithstanding China’s high-profile anti-corruption drive, Chinese companies now fill 27 of the 29 places reserved for the ‘worst rated’ businesses for transparency in Transparency International’s ratings.
Moreover, in 2015, China obtained a score of just 37 (coming 83rd out of a total of 167) in the Corruption Perceptions Index. Neither ranking is presumably the ringing endorsement China was hoping for in its efforts to bolster its reputation for international trade.
It is worth considering these developments within the wider context of the legal reforms implemented in China over the last couple of years. In a ‘decision’ announced in late 2014, the Central Committee of the Chinese Communist Party for the first time addressed the topic of the rule of law.
Some headline goals contained in the decision to be noted (and welcomed) here include the expansion of legal aid, the clarification of rules of evidence during the litigation process, and the expectation that judges are to include fully reasoned legal analysis in their (now publicly available) opinions.
Indeed, although the intention is to reduce the number of judges overall, this goes hand in hand with an apparent attempt to enhance judges’ social standing, increase pay, and generally improve professionalism.
These measures, along with a new prohibition on ex parte contact and the previous practice of refusing cases, are all manifestations of the decision’s broad aim of an ‘internalisation of a rule of law culture’, as Randall Peerenboom, a law professor at La Trobe University, has called it.
Communist Party’s role
Given these apparently positive reforms, one might be confused as to why China’s transparency rankings are still so dismal.
The answer may lie in the fact that the Central Committee’s decision has actually strengthened the Communist Party’s role in the investigation of major corruption cases. More prominent judges and decisions can, of course, be monitored all the more easily. Furthermore, recent research by Fenfei Li and Jinting Deng, ‘The power and the misuse of power by China’s local procuratorates in anticorruption’, suggests that there remain ‘strong institutional motives’ for selective prosecutions within the criminal law at local state levels.
Although the reform programme has attempted to ensure greater supervision over local decision making (for example, by transferring funding and selection decisions to provincial courts and establishing ‘circuit courts’ more generally), it could be argued that this simply replaces the possibility of local undue influence with that of the party.
At the higher level, pre-trial televised ‘confessions’ remain commonplace, raising serious question about the party’s commitment to due legal process. As a consequence, the effectiveness of China’s anti-corruption drive may be less emphatic than the headlines coming out of Beijing would at first have us believe.
Thus, while we should welcome the steps taken to ‘professionalise’ the Chinese judiciary in many respects, it may be that the process has little real effect on the efficacy and integrity of the corruption investigations currently being publicised. For some, the question remains whether the Chinese Communist Party’s new-found commitment to the rule of law is more a means to an end than an end in itself.
James Macdonald, pictured, is a barrister and Benjamin Harrison a paralegal at 7BR Chambers @7BedfordRow www.7br.co.uk