Graft buster recovers stolen funds – SVA Comments

Analysts expect mainland authorities will continue their crackdown on graft after the Ministry of Public Security announced it had recovered nearly 50 billion yuan (HK$64 billion) of stolen money last year.

The ministry said in a statement on its website Thursday that it had recovered 49.26 billion yuan after busting 149,800 cases of economic crime.

The ministry’s announcement highlighted 10 major cases from last year, including British pharmaceuticals giant GlaxoSmithKline’s (GSK) alleged bribing of mainland officials. Further investigations were being conducted on the GSK case, it said.

“We successfully busted a slew of major cases including GSK’s China subsidiary, which is suspected of serious economic crimes,” the ministry said.

Mainland police have urged the public to blow the whistle on graft, with offers of financial rewards for accurate tips.

Dane Chamorro, Southeast Asia managing director of Control Risks, a British risk consultancy, said the anti-corruption crackdown would expand into other sectors.

“It is a major political platform of the new leadership, partly to settle political scores,” he said. “It is addressing the reality that corruption undermines the appeal of the Chinese Communist Party to the population.”

The crackdown was also being used to force multinational firms into “obedience” towards the central government’s requirements, such as lowering their prices and giving more market space for mainland competitors, Chamorro said.

“This is especially true of sectors dominated by foreign players, such as pharmaceuticals,” he said.

Steve Vickers, founding chief executive officer of Steve Vickers Associates, a Hong Kong risk consultancy, said: “Although the amount in the announcement appears very large, it’s a very small percentage of the huge scale of corruption and fraud in China.”

Noting the prominence of GSK in the ministry’s announcement, Vickers said it was “a high-profile case with political undertones”.

Other major cases of economic crimes mentioned by the ministry included an export tax rebate fraud in Shenzhen from which police recovered nearly 100 million yuan. Police also arrested executives at a number of financial institutions, including Citic Securities and BOC International, in a bond fraud that netted 100 million yuan of illegal profits.