Wider reforms needed to tackle corruption

PUBLISHED : Friday, 18 February, 2011, 12:00am
UPDATED : Friday, 18 February, 2011, 12:00am

There is nothing more embarrassing for China's leaders than corruption in high places, but the prospect of it at the top of the powerful Railways Ministry is especially troubling. Dismissed Communist Party railways secretary Liu Zhijun had been in charge of the monumental high-speed rail network, a lynchpin of the government's drive to change the nation's economic and social fabric and symbol of its burgeoning technological prowess. His removal is fuel for critics of the multitrillion-yuan project and although graft has not been officially mentioned - he is being investigated for 'violation of discipline' - a euphemism for corruption. Liu's removal reminds us of the depth of the problem posed by corruption on the mainland and also highlights Beijing's efforts to combat it. The authorities now have a prime opportunity to put in place measures to prevent a repeat.

Speculation abounds as to Liu's downfall, just as it did when the last official of his stature, Shanghai party secretary Chen Liangyu , was removed five years ago. Although Chen was jailed for pension fund fraud, in some circles his fall from grace was put down to political infighting in the party's uppermost echelons. With internal jostling for power increasing as next year's leadership transition nears, those same suspicions have re-emerged. Most likely, though, are mainland media claims of corruption.

They link Liu to two ongoing investigations involving the railway industry that point to crony capitalism. In one, a Shanxi businesswoman, Ding Shumiao , has been arrested; in the other, an inquiry is under way into Luo Jinbao, the former chairman of the China Railway Container Transport Corporation and the listed China Railway Tielong Container Logistics Company. The amount involved is vast - 10 billion yuan (HK$11.8 billion) - making it likely that if fraud has taken place, some ministry officials are involved. Internet forums, always awash with complaints about misuse and abuse of public funds, are garnering ever-angrier comments.

It is such discontent that President Hu Jintao is trying to avoid by persistently promising to get ever-tougher with corruption. Considerable inroads are being made; in the first 11 months of last year, almost 120,000 graft cases were investigated by watchdogs, resulting in 113,000 people being punished. But graft is endemic at all levels of mainland society and the government is far from immune, despite there being more than 1,200 directives, rules and laws against the scourge. About 10 per cent of government spending, contracts and transactions are believed to be either stolen or used as kickbacks and bribes. The chance of a corrupt official being imprisoned is just three per cent, making fraud a low-risk, high-return activity. China's infrastructure boom is a particular draw. With 3.5 trillion yuan being invested in high-speed railways over the next three years, the opportunity for illicit personal gain is enormous.

Liu's replacement, the chief of the customs authority, Sheng Guangzu , has a tough job. He must restore confidence while calming dissenting voices about the hefty costs and safety of the high-speed rail system. Liu resisted efforts to merge the ministry with others in the transport sector; those calls are already re-emerging.

The government now has an opportunity to review progress and will have to step up monitoring. It is important that the problems with the troubled railways ministry are resolved. But if corruption in society is to be tackled, wider reforms are needed. That means introducing more transparency in government, strengthening the rules and allowing the media greater freedom to investigate.