'Naked officials' lay bare China's
graft By Brendan O'Reilly
Corruption is a fact of life in China. As
China's economy has grown rapidly over the past
three decades, the opportunities for unscrupulous
officials to amass private fortunes have
proliferated. At the same time, the standard of
living for the majority of Chinese citizens has
greatly improved along with China's economy. Some
level of corruption has been tolerated, so long as
the rising tide continued to lift all boats.
However, there remains one type of corrupt
officials whose excesses are so great as to expose
the political shortcomings of China, and threaten
the very stability of the nation itself.
The so-called "naked officials" represent
corruption on a truly egregious scale. As the new
generation of leadership waits to
take power in Beijing,
these "naked officials" are laying bare the
deficiencies of China's political system.
"Naked officials" are government
administrators who embezzle funds to overseas
accounts while living relatively simple lives
within the People's Republic of China (PRC). They
send their spouses and children overseas in order
to administer and enjoy the fruits of their
corruption. In order to flee China at a moment's
notice, they often keep a visa ready for their
desired foreign destination. Such officials are
said to be "naked" due to the fact that their
wealth is closeted away in foreign bank accounts
and investments and their families live outside
China or hold foreign passports.
The fact
that a widespread term exists for officials who
engage in this behavior is in and of itself
indicative of a major problem. Last year, a report
from China's central bank estimated that roughly
18,000 officials and high-ranking personnel in
state-owned enterprises had fled the country
within the last decade. The total sum of their
embezzled wealth was said to be around 800 billion
yuan (US$130 billon). [1]
The United
States, with its multiethnic communities and lack
of an extradition treaty with China, is the
favored destination for higher-ranking naked
officials. "Immigrant investor" programs, which
typically require applicants to invest $1 million
in the US in order to obtain a green card, are a
viable option for the ambitious and unscrupulous.
In 2011, about 75% of applicants for this type of
visa to the US were from China. [2]
Naked
officials are particularly harmful to the
stability of China's political system for three
inter-related reasons.
First, the scale of
their corrupt practices is immense. The amount of
800 billion yuan represents a huge chunk of
economic resources. To put this number into
perspective, in the past decade China invested
about 35 billion yuan in a manned space program.
In other words, the money invested in China's
(ambitious and extensive) space program is roughly
4% of the funds embezzled by naked officials.
Secondly, naked officials are usually
beyond the legal reach of China, although truly
exceptional cases can be punished with the death
penalty. For example, in 2007, the former head of
the State Food and Drug Administration, Zheng
Xiaoyu, was given the death penalty for accepting
huge amount of bribes.
Finally, beyond
being corrupt, the "naked officials" are
unpatriotic. They funnel money meant for domestic
infrastructure, education and other public works
into the real estate markets of Vancouver and San
Francisco. The practice of expropriating funds
from (relatively) poor China to (relatively) rich
foreign countries for personal gain touches a raw
nerve with a Chinese public with strong collective
memories of imperialistic exploitation. This is
truly a red line for the Chinese people.
Understandable rage is building towards
the naked officials. Corruption will increasingly
be a source of popular frustration as the rate of
China's economic growth slows. Unless the Chinese
government can find effective ways to combat
egregious and unpatriotic corruption, the
existence of naked officials may threaten the very
political legitimacy of the Chinese government.
Bo Xilai as the emperor with no
clothes The recent fall from grace of Bo
Xilai, former party secretary of Chongqing
municipality and tipped by some as destined to
join the top level of government, may be related
to a new will on the part of the Chinese Communist
Party to crack down on the excessive obscenity of
the naked officials. Bo's infamous story has been
related many times, but his association with naked
officials remains largely unexplored.
Bo's
family allegedly was squirreling away assets
overseas while he very publicly cracked down on
corruption in Chongqing. The murder of British
businessman Neil Heywood may have been motivated
by Bo's nefarious overseas investments. Bo's wife,
Gu Kailai, recently confessed to murdering Heywood
because he "knew too much" about the embezzlement
of over $6 billion to the foreign accounts of
trusted friends and relatives. [3]
According to the official account, Bo was
the naked official extraordinaire, nearly
ascending to the pinnacle of Chinese leadership
while looting his motherland, accumulating
overseas bank accounts, and sending his son to
Harvard. His wife also reportedly holds Hong Kong
permanent residency and perhaps some foreign
passports. His abrupt plummet into national shame
may be indicative of political will to clamp down
on the public excesses of the political elite,
especially the particularly loathsome naked
officials.
Bo's accumulation of foreign
assets is starkly contrasted to the business
practices of the extended family of the Xi
Jinping, expected to take over leadership of the
country from Hu Jintao after this autumn's party
congress. A recent investigation by Bloomberg
found Xi's sister, Qi Qiaoqiao, to have amassed a
sizable business empire. However, Qi Qiaoqiao's
fortunes are almost entirely invested in
businesses within the Chinese mainland itself,
(excluding significant real estate in Hong Kong).
[4] Furthermore, no significant wealth or
wrongdoing could be traced back to Xi himself.
The contrast between Bo Xilai and Xi
Jinping in this matter is telling. Bo's family
allegedly hold their ill-gotten assets overseas,
and used murder to try to protect the money trail.
The wealth of Xi Jinping's relatives, on the other
hand, is still well within the grasp of the
Chinese state (although, it must be noted, Xi
Jinping's daughter also studies at Harvard).
Ending the
indecency While new leaders jockey for
position at the top, the Chinese government is
taking measures to crack down on the depravity of
naked officials. The National Bureau of Corruption
Prevention and the Ministry of Supervision has
implemented a monitoring regimen for officials who
have spouses or children living abroad. Changes to
the criminal law code, due to take effect next
year, will allow seizure of the foreign assets of
corrupt officials. [5] China has also asked for
the cooperation of the United States in monitoring
large monetary transfers.
These measures
display a certain level of political will, but
more demanding political reforms will be necessary
to stamp out this danger to the government's
legitimacy. First and foremost, greater
transparency is needed throughout the Chinese
government in order to combat all-pervasive
corruption.
In order for a political
system to be flexible, there must be forms of
public accountability besides prison and the death
penalty. Small-scale experiments with competitive
elections in local village councils could be
expanded to higher offices. Officials who are
directly accountable to the Chinese citizens for
their livelihood should be less likely to embezzle
public funds.
In Shenzhen, officials with
immediate family members living abroad are barred
from serving in high-ranking positions within the
government and Party. This program could be
adopted on a national scale. The benefits would be
twofold - first, potentially corrupt officials
would have a more difficult time embezzling funds
and fleeing the country. Secondly, officials would
have a greater motivation to enact policies that
could ensure better economic, social, and
environmental standards within the People's
Republic.
Finally, the Internet could be
used as a bottom-to-top method for monitoring and
reporting official misconduct. Luo guan, or
"naked official", is not a censored phrase within
the confines of the Great Firewall of China.
Discussions abound of the best methods to deal
with the problem. One Chinese netizen suggests the
establishment of an official website to out naked
officials. The adoption of this tactic would allow
common citizens to combat the excesses of the
political elite, while at the same time
strengthening and legitimizing the CCP's political
monopoly.
Such legal and governmental
reforms would be a step in the right direction,
but they cannot entirely end the scourge of the
naked official. Cultural changes would need to
take place along with legal reforms. An open and
consistent legal framework would diminish the
privileges of well-connected officials, but it
would also go a long way in perpetuating the
overall legitimacy of the state. Most importantly,
it may be necessary to temper the ubiquitous
worship of money by a sense of national
responsibility. Public patience will not last
forever. If the CCP leadership does not take
concrete steps to clothe its naked officials, it
may find itself out in the cold.
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