All aboard the international anti-graft bandwagon

PUBLISHED : Sunday, 31 January, 1999, 12:00am
UPDATED : Sunday, 31 January, 1999, 12:00am

'THERE is no odour so bad as that which arises from goodness tainted.' These are the moralistic words by Henry David Thoreau that thunder from the Web site of non-governmental agency Transparency International.

They might be the rallying cry for the global fight against corruption and malpractice that is now gathering steam.

It appears the champions of the commercial equivalent of realpolitik are beating a strategic retreat: it is no longer acceptable to think of bribes as the necessary grease in the wheels of business, a kind of charge on multinationals wishing to tap emerging markets.

Bribery, the new creed says, is inefficient. It is a cancer that works away at the very fabric of society, destroying democratic institutions and robbing ordinary people of their just deserts.

For some time bribery in international transactions was regarded as a kind of taxation. The countries where corruption was most prevalent were also those where taxation was erratic, often low level and collection inefficient.

Bribery was just another way of distributing the dividends of foreign direct investment.

Thankfully, that view is now thoroughly discredited.

The money never ends up in the pockets of the poor: it is salted away in offshore bank accounts or sloshes around dodgy investment projects, further weakening the financial systems of the world.

Public patience at graft has worn out, as witnessed by social disturbance as far afield as Belgium, Indonesia and the mainland.

But forget the moral high ground for a moment.

The fact of the matter is that bribery not only stinks, it corrupts the smooth operation of the markets - it is plainly inefficient.

A hidden cost, not open to scrutiny or review, bribery also diverts resources from where they could be best utilised.

So for all the high-falutin' and high-minded language in which the Organisation for Economic Co-operation and Development has couched its convention combatting the bribery of foreign public officials, the simple truth is that it makes good economic sense.

Just in case anyone was wondering, this is no small-scale problem. The World Bank estimates the flow of bribes across borders at about US$80 billion a year - a figure most observers believe to be wildly underestimated.

No one is claiming the treaty will cure all ills that corruption causes overnight. It contains too many grey areas and classic diplomatic fudges to do that (see page 3).

Perhaps it would be asking too much. After all, this is the first co-ordinated attempt to introduce some kind of global criminalisation of bribery and put in place a network of mutual legal co-operation and enforcement.

It is also notoriously tricky to mesh wildly different legal systems together in an international treaty. Perhaps the very flexibility of the convention is the one thing that guarantees its success - however limited that might be.

One thing is certain: this treaty is just a first step, and one that is very much in the right direction.

The OECD expects further international action to follow and welcomes further signatories to the convention - which is not only open to the 29 member states.

The organisation points to moves in a number of countries to scrap the provisions in tax laws that enable bribes paid to foreign officials to be written off.

Hong Kong must climb aboard the bandwagon, and for two reasons. First, we stick out like the proverbial sore thumb. Japan, South Korea and Singapore have all signed. We must join. The Government could even anticipate this eventuality by bringing our law into line with the provisions of the convention.

Hong Kong is a centre for international firms operating in Asia, and a crucial conduit for direct investment into emerging economies. As such, the suspicion holds that we are also one of the biggest suppliers of corruption abroad.

While Hong Kong has an enviable reputation for combatting corruption at home, it is now time to look to the behaviour of our businessmen overseas.

The second reason would be to lend meaningful support to Beijing in its bid to erase corruption.

It is little use applauding such efforts from the ivory towers of squeaky-clean Hong Kong if we are merely exporting our evils.