Beijing losing the gambling battle
By Stephen Wong
SHANGHAI - Beijing's efforts to crack down on gambling by Communist Party and
government officials with public funds seem to have made little headway. While
longer jail terms and the risk of losing their jobs fail to deter officials
from gambling, visa restrictions to Macau - the most popular gambling
destinations for Chinese officials - has only driven officials to online
casinos. As a result, online gambling inside China increasingly flourishes and
the sums involved are become increasingly staggering.
Police in Central China's Hubei province recently found that government
officials and heads of state-owned companies were among the tens of thousands
of people gambling on sports and
horse races, as well as lotteries like the Mark Six in six online casinos. The
casinos have managed to accrue more than 50 billion yuan (US$7 billion) since
the illegal operations began in 2004.
The offenders include the head of a state-owned enterprise who gambled away
more than 100 million yuan of company money in total, breaking the record set
by Li Weimin, the mayor of a small city in Guangdong who lost more than 90
million yuan in Macau casinos between 1998 and 2004.
The news triggered public outrage. Critics asked how such a huge amount of
money of a state firm could so easily be "stolen" by its executive without
being caught by the state-asset watchdog overseeing the operations of
state-owned enterprises. Had police not investigated the casinos, the gambling
executive might never have been caught.
Police did not say how many more government officials and managers had taken
part in online gambling or how much money they gambled, but the cases - said to
be the biggest online gambling case ever uncovered in China in terms of the
amount of money and number of participants - shows that Beijing's battle
against gambling officials is far from being won.
Chinese leaders have launched recurring campaigns against officials for
gambling as part of an effort to curb the widespread corruption that has
undermined public trust in the government.
As early as 2005, the Communist Party issued an explicit gambling ban on all
officials and threatened to fire those who dared to take part in gambling
activities. But apparently the ban has failed to deter officials.
Macau, the former Portuguese colony and gambling center now under China's
sovereignty, used to be the favorite destination for Chinese officials. In
January, anti-corruption agents revealed that 53 officials from Guangdong
province embezzled 22 million yuan (US$3.2 million) in public money to gamble
in Macau.
Among those facing charges is Chen Zhiqiang, a Communist Party official in
Foshan City who allegedly embezzled 13 million yuan to feed a gambling habit.
The Southern Metropolis Daily said that in 2005 and 2006, Chen traveled to
Macau 63 times, four times in one week.
Last month, Zhang Jichun, a housing official in Beijing, stood trial for
allegedly embezzling 7.3 million yuan to gamble in Macau from 2005 to 2007.
A 2008 study of 99 high rollers from mainland China showed that 59 had some
sort of state affiliation: 33 were government officials, 19 were senior
managers at state-owned enterprises and seven were cashiers at state
businesses, according to the study, which was conducted by Zeng Zhonglu, a
professor at Macau Polytechnic Institute.
This prompted the government to impose visa restrictions on government
officials last year. The new regulations limit a mainland official to only a
single, seven-day trip in at least three months.
While the visa control was hailed as quite effective at the beginning, the
active participation of government officials and state managers in online
gambling has given Beijing new challenges. Compared with gambling in
traditional casinos, online gambling is more difficult to trace - the gamblers
don't have to cross the border or transfer money to overseas accounts.
The Chinese have a reputation as gamblers and although banned by the
authorities, a small bet is usually regarded as harmless entertainment.
But for government officials, gambling is more than mere entertainment - it's a
symbol of wealth, a way to take or give bribes, and to build guanxi connections.
So when one official gambles, his co-workers and subordinates can easily pick
up the habit.
That explains why all nine top executives of Beijing Urban and Rural
Construction Group, a state-owned real-estate company, were hooked on gambling.
The former general manager, Nie Yuhe, would stay up the whole night gambling,
Xinhua said. All nine have been sentenced to jail for embezzling public funds
or taking bribes.
Chinese officials are not highly paid. But they are often seen flaunting
decadent lifestyles and betting big in casinos outside China. According to Zeng
Zhonglu's study, gambling Chinese officials reportedly lost an average of
US$2.7 million each in Macau.
The question is, how can Chinese officials have so much money at their disposal
and why are they so reckless with it?
Officials seldom use their own money to gamble. Li Weimin, the mayor who
gambled away more than 90 million yuan in Macau, did not spend a penny of his
own money, although he owns several properties and shares in several companies,
state media reported.
As mayor and head of four township companies, Li could take money from company
accounts as easily as if it were his own money. And his power was totally
unmonitored: nobody launched any complaints and no auditor raised any
questions. He was not caught until after he left his position in 2004.
Similarly, Liu Sicheng, the finance chief of a small city in central China's
Hunan province, gambled 8.1 million yuan of public funds from 2002 to 2007
without being noticed until he tried to flee. He was a high-profile gambler at
local casinos and even bought a car to carry cash to casinos.
Some critics say that gambling, especially by officials, undermines China's
economy because a lot of the money lost went abroad. The welfare lottery
research institute of Beijing University said nearly 600 billion yuan (US$72
billion) of funds flow to gambling houses or race courses in other countries as
well as Hong Kong and Macau every year, in a 2005 report.
In the recent online gambling cases uncovered by Hubei police, most of the
funds that the online casinos took in have been channeled into overseas
gambling operations through an elaborate series of underground money laundering
ventures.
But what's more, at stake is the government's image, as gambling is often
related to corruption. This is a malicious cycle: officials gamble with money
from corruption while gambling breeds more corruption.
China's lawmakers have been calling for harsher punishments for gambling
officials. The jail term for gambling in the effective Criminal Code is set for
three years. As a growing number of public servants, especially high-ranking
officials, are involved in cases of gambling with public money, lawmakers
requested the term be extended to life imprisonment.
But raising jail sentences will likely do little to scare away officials from
casinos. China's up-down method of supervision cannot effectively monitor the
leader of a government body, and as long as their power is not better
constrained, officials will always have enough public money to feed their
gambling habits.
To curb gambling and gambling-linked corruption, China needs a free press and
an independent judicial system to expose the wrongdoing of public officials.
While heavy handed campaigns can curb gambling for a while, to root out
gambling and corruption by officials, Beijing needs political reforms.
Stephen Wong is a freelance journalist based in Shanghai.
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