A study of Hong Kong Government's anti-corruption strategies

Abstract

(Uncorrected OCR) Chapter 1 Introduction Corruption is the behaviour which deviates from the formal duties of a public role because of private-regarding wealth or status gain. It relates to the offering, giving, soliciting or accepting of an inducement or reward, which may influence the action of someone with power so that he will abuse his power to favour the giver. This includes bribery and extortion, which involve at least two parties, and other types of malfeasance that a public official can carry out alone, including fraud and embezzlement. Leff (1964) argued that corruption had a beneficial impact upon economic development.3 In countries where public sector w?ages were often low and civil servants find themselves inadequately remunerated but with high levels of discretionary powders, this mismatch lies at the heart of the corruption at lower and middle level, particularly for those w?ho are referred to by Michael Lipsky as ' Nye, J.S. (1967), Corruption and political development: a cost- benefit analysis, American Political Science Review, Vol. 61, p.417. 2 Kumar, C.R. (2002), 'Viewpoint - The benefit of a corruption-free society, in Hong Kong Lawyer, (December 2002), LexisNexis Butterworths, Hong Kong, p.39. 3 Leff, N. (1964), 'Economic Development Through Bureaucratic Corruption', American Behavioral Scientists 8(3):8-14. 1 2 "street-level bureaucrats".4 It was natural for them to supplement their salaries by other means. It was also asserted that corruption played a useful role in allowing cumbersome administrative procedures to be bypassed, or in transferring resources from wealthy individuals and corporations to those with more modest means. Corruption, in these circumstances, is regarded as a lubricant maintaining the machinery of economic enterprise. Although a given incident or transaction can have positive results, corruption may also generate negative externalities that degrade the performance of the system as a w7hole and compromise the economy's long-term dynamic efficiencies. According to World Bank (1988), corruption increases transaction cost and leads to 'inefficient economic outcomes' - through reducing investment, diverting human capital to rent-seeking activities, and reducing the state's ability to generate revenue.3 Many of the so-called benefits from corruption only appear against the background of a public sector that is failing to perform effectively. Patient and persistent efforts toward improved public sector management are likely to result in greater benefits than tolerating relatively high levels of corruption to compensate for these deficiencies. 4 "Street-level bureaucrat" (SLB), as described by Michael Lipsky (1980), is public service workers who interact directly with citizens in the course of their jobs, and who have substantial discretion in the executive of their work. Typical SLB are teachers, police officers and other law enforcement personnel, social workers, judges, public lawyers and other court officers, health workers and many other public employees who grant access to government programs and provide services within them. 5 World Bank (1988)(accessed : 22 February 2005), Corruption and Development, Prem Notes, Washington DC. Available: http://wwwi.worldbank.org/prem/PREMNotes/premnote4.pdf 2 Finally, corruption is indiscriminate, in that it encourages people to avoid both good and bad regulations. Without doubt, corruption undermines democracy and the rule of law. It impedes development and weakens social stability. It leads to inadequate social services, reduces productivity and encourages laziness.6 In fact, the history of Hong Kong represented what appeared to have been an intractable case of a society in which corruption was deep-rooted as part of political, economic and social life. Research Interest and Hypotheses This research study constitutes an important first attempt at locating the problem of corruption in the broader context of Hong Kong political environment in the light of past and recent literatures. Little has yet been written on the specific characteristics of Hong Kong corruption, as shaped by its peculiar social and historical circumstances. This paper provides a useful strategic view, using case examples, of the relationship between corruption and the political development in Hong Kong. It seeks to identify the mechanism and strategy against corruption previously and currently existing in Hong Kong, particularly those adopted by the Independent Commission Against Corruption (ICAC), a first ever anti-corruption 6 Matsheza, P. and Kunaka, C. (1999), Anti-corruption mechanisms and strategies in Southern Africa, Jetline Visual Communications, Parktown, Johannesburg, p.6. j 4 agency independent from the civil sendee. This research will provide a detailed analysis of the Hong Kong government's instituting major anti-corruption programs over a prolonged period of time. Against this background, the first two hypotheses being investigated in this thesis are "How effective are Hong Kong Government's anti-corruption strategies to combat the corruption situation in Hong Kong after the establishment of the ICAC?" and "Is there any room for improving the anti-corruption work in Hong Kong". According to the result of empirical analyses which include, inter alia, analysis of corruption trends by studying the number of corruption complaints received in the past three decades, there had been steady increase in corruption complaints in the private sector. Thus, the third hypothesis in this thesis is to find out: "Whether the increase in corruption complaints on the part of the private sector means the Hong Kong Government's anti-corruption strategies being ineffective in that sector". My conclusion at the end of this research is that the anti-corruption strategies in the post ICAC era is on the whole very effective despite the fact that there exist some limitations on the part of ICAC to reverse the ascending corruption trend in the private sector caused by some social factors since mid 1980s. These social factors included change of people's attitudes towards corruption in the business sector, issues of handover of sovereignty in 1997, Asian financial crisis, 4 5 influx of Mainland immigrants and visitors, increase in number of listed companies, and rapid growth of cross border transactions. This thesis also argues that there is a larger dimension to corruption that is determined by the historical and social context, i.e. by factors affecting social cohesion (e.g., income and wealth, education, ethnic and other differences), the economic strategies pursued by the government, the extent of market transactions, and the rate and sources of economic growth. So, an account of historical context and precipitating events, which led to a progression of reforms aimed at suppressing corrupt practices, forms a chapter of this dissertation. It shows that detection and punishment, education and prevention formed the bedrock of the successful anti-corruption strategies in Hong Kong. Through case studies, analysis of corruption trends and figures on prosecution and conviction, together with the result of the survey on people's attitude towards corruption and perception of ICAC performance, this studies critically examines the effectiveness and impact of ICAC's three-pronged strategy and proactive approach in fighting corruption. Another important task to be accomplished by this research is to identify and recommend matters to further improve existing strategies for the betterment of Hong Kong in the fight against corruption. 5