31 March 2014

“Do you lust after money, jewellery and paintings? Are you starved of affection at home and considering an extra-marital affair?

If the answers to those questions were, “Yes” you could be on the verge of becoming a corrupt Communist Party official, according to a new ethics test aimed at purifying the Chinese civil service”.

Ironically this report of a new tool for training China’s officials to resist temptation was publicised as a massive investigation in the corrupt activities of Zhou Yangkang comes to a head.

Zhou, formerly one of the nine members of the Standing Committee of the Politburo, had been a national security chief with charge of police, prosecutors, courts and intelligence agencies. That was until August 2013 when he became a target of the President’s campaign against corruption by the party elite.

Now confined at a military base in Inner Mongolia, assets worth at least $US 14.5 billion have been seized from Zhou, his family and associates. He was the head of China National Petroleum Corp, the country’s largest oil and gas company. That provided the opportunity to develop energy related interests including brokering sales of oil-field equipment to Iraq (causing huge losses for Chinese state-owned oil companies); constructing hydroelectric power stations in Sichuan (where his father was the provincial party boss from 1999 to 2002); providing information technology for 8,000 state-owned gas stations; and investing in real estate, oil exploration and toll roads.

The most damaging revelation so far concerns Zhou’s friendship with a billionaire mafia boss, Liu Han, now on trial for organised crime and murder. Liu made his fortune with Zhou’s help.

The reference in the ethics test to an extra marital affair has a connection with Zhou’s case, as in many high profile corruption proceedings. Mistresses have become the ultimate symbol of Chinese corruption. A 2007 Government inquiry reported that about 90% of senior officials embroiled in corruption scandals kept a mistress – and in the case of the former Railways Minister jailed for corruption in 2013 – 18 mistresses.

One of the charges brought against Zhou centres around his wife. She is a media personality 28 years his junior. He was having an affair with her at the time his then-wife died in a car crash allegedly arranged by Zhou.

The State Services Commission guidance to Crown Entities published on 28 March seems somewhat mundane by comparison.

The provisions relating to gifts and hospitality include the following:   “All Crown entity boards need to have in place a clear and well-understood internal policy on accepting and offering gifts, hospitality or other benefits, and how they will be recorded and disposed of. Key elements of any policy and practice require:

  • that board members must not solicit gifts and benefits from, or on behalf of, anyone under any circumstances;
  • board members not to accept gifts and benefits from anyone, or on behalf of anyone, who could benefit from influencing them or the entity;
  • open and transparent practices in relation to gifts that enhance trust in the State services, and reduce any misplaced speculation;
  • an agreed approach to the dollar value of gifts or hospitality that are appropriate for board members to accept, and the practice to be followed regarding the use of benefits in kind (eg, air points);
  • that, unless they are ‘consumable’ at the time (eg, meals, invitation to events), gifts should be regarded as the property of the entity;
  • the context to be taken into account when considering hospitality offered by stakeholders to balance the opportunities that may be provided against the potential for criticism. For instance, does the timing coincide with a particular board decision that could affect the donor: how relevant is the event or function to the entity’s role; will the board’s interests genuinely be advanced by having a board member present; should the entity itself meet the costs of attendance in order to avoid any perceptions of influence over the board?
  • close scrutiny of offers such as invitations to attend conferences in New Zealand or overseas that may comprise travel, accommodation, meals, a fee for speaking, and/or inclusion of a member’s partner. It is essential to consider whether there would be real value to the Crown entity from attendance, and – if so – who is best placed to represent the board or the entity; and
  • that all boards which are considering offering gifts or hospitality should think very carefully about both the cost and the public and political perception of doing so. Policies needs to specify the purposes for which, and occasions on which, it is acceptable to give gifts, and the nature and value of gifts that are appropriate to particular occasions.”

Perhaps Zhou will regret similar advice was not available to him!