Call to name and shame bribed officials

PUBLISHED : Wednesday, 12 August, 2009, 12:00am
UPDATED : Wednesday, 12 August, 2009, 12:00am

News that a US firm was fined for offering kickbacks to mainland officials in exchange for contracts has prompted a fresh round of discussion in state media over international corporations involved in 'commercial bribery'.

Adhesive label maker Avery Dennison was fined US$200,000 by the US Securities and Exchange Commission on July 28 for making, or promising to make, improper payments to mainland officials in order to win contracts. The story began to circulate in the mainland media a week later. But unlike the Rio Tinto case - in which the Anglo-Australian mining giant was accused of illegally acquiring commercial secrets - reports focused on why officials who had received the bribes from Avery had not been identified.

An SEC statement said from 2002 to 2005, Avery's Chinese subsidiary paid about US$30,000 to mainland officials. In one transaction, Avery China won a contract with a state-owned company by indirectly paying an official about US$25,000.

In August 2004, Avery China was awarded two government contracts to install new graphics on about 15,400 police cars. The company won the contracts by agreeing to increase the price of the graphics by more than US$41,000, which would be funnelled to officials.

But the company's Asia-Pacific Group discovered the scheme before the bribes could be paid and blocked the illegal payments.

The SEC statement marked the end of the commercial bribery investigation into Avery after the company accepted the fine and promised to forfeit future profits from illegal deals. But it was just the start of a new campaign on the mainland, as many state media outlets called for the officials to be named and shamed.

A research institute in Wuxi, Jiangsu province, under the Ministry of Public Security, was identified as a partner that may have helped Avery in land deals. China News Service reported yesterday that the institute refused an interview request and guards denied reporters entry to the office building.

A spokesman for the Wuxi police said his bureau had never had any business contact with Avery, though the city of Wuxi was mentioned in the SEC complaint.

A commentary in the Legal Daily said officials should not be let off the hook as it created a poor impression about the investment environment. 'Why should the briber be fined but the bribe recipients always get off free?' the article asked.

Yang Du, a professor at Renmin University specialising in commercial bribery, said the government would eventually look into the Avery case, but it could take some time before a result was announced.

'The government does not want the investigation to be interpreted as a follow-up to the US investigation,' he said. 'The impression that foreign countries are helping China fix its corruption problems is the last thing this government wants.'