Features | Society | Southeast Asia

Asia Gets Tough on Graft. Kind of.

Thursday marks UN Anti-Corruption Day. There’s plenty of it to be worried about, reports Simon Roughneen from Bangkok.

By Simon Roughneen for

Despite the supposed global nature of the economic crisis, a number of countries in Asia have managed to maintain robust enough growth rates to make the whole thing feel more like a Western story. But while the resource sector in energy-hungry China and the construction sector boom of new roads and high-rise buildings across the continent suggest the region should be well on its way to slashing poverty, there’s a potentially major obstacle to continued rapid growth: these booming sectors are chronically corrupt.

Speaking at the recent International Anti-Corruption Conference in Bangkok, Prof. Paul Collier said that increased corruption could undermine the opportunity for many of the about 900 million Asians living on less than $1.25 a day to climb out of poverty.

‘Commodities and construction are the two most corrupt sectors on earth,’ said Collier, a professor at Oxford University and author of The Bottom Billion.

Eyebrows were raised by the choice of Thailand, a country with a reputation for bribe-seeking police and kickback-chasing officials, to host the IACC. Indeed, Prime Minister Abhisit Vejjajiva acknowledged the seriousness of the issue in his country when opening the event, saying that corruption isn’t just a problem in Thai business or politics, but that it has deeper roots. ‘An unbelievable number of people believe that it’s OK for politicians to be corrupt so long as they can bring economic growth,’ he said.

While such ingrained views may not be universal, the fact is that corruption exists everywhere, even in countries that pride themselves on clean government and a transparent business culture—and even if they might be in denial about it. During the IACC, for example, journalists from Costa Rica told of Finnish corporate involvement in a domestic corruption case, which the Finnish Government and media refused to investigate or even acknowledge.

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In Asia, Thailand’s neighbour Cambodia ranks a lowly 154 out of 178 in the 2010 Transparency International Corruption Perception Index (CPI), the second-lowest in South-east Asia after Burma, and well below Thailand on 78. So far, Chinese investment into Cambodia during 2010 is estimated at $8 billion, comprising around 360 projects.

A plan to build what will be Asia's tallest building was mentioned by Prime Minister Hun Sen in September, in what would be the showpiece of Phnom Penh's property and construction boom. But if Collier's thesis is correct, then Cambodia's new-found building boom, funded by Chinese investment and resource extraction, is bound to mean more backsliding in the global graft indices for the country.

Still, Cambodia recently announced the first arrest of an official on alleged bribery charges by the country’s new anti-corruption task force, on charges of accepting $8000 in bribes from illegal loggers. Other countries in the region have been taking similar action. Indonesia's KPK, or independent Corruption Eradication Commission, recently appointed a new head after the previous one resigned mid-term to face murder charges in a trial that his defenders view as a thinly veiled effort to sabotage the KPK (the body has been handed a strong mandate to go after suspects in politics, the bureaucracy and business).

At least some Asian countries, then, seem to be taking the graft bogeyman seriously. But the actions on corruption aren’t always matching the rhetoric. If a corruption case is initiated in Cambodia, for example, the plaintiff almost certainly faces a defamation suit in response, which deters many from filing a complaint in the first place.

Meanwhile, although Thailand has a National Anti-Corruption Commission, it seems unlikely to ratify the UN Conventions Against Corruption (UNCAC) anytime soon. Abhisit implied that Thailand's own domestic laws are sufficient to deal with corruption cases, a point that was quickly put to the test when his ruling Democrat Party narrowly-avoided disbandment and removal from office on November 29, when the court ruled against hearing a case about the party's alleged misuse of electoral funds, based on a technicality.

In addition, WikiLeaks cables leaked from the United States Embassy in Bangkok that discuss the case of alleged arms trafficker Viktor Bout quoted Ambassador Eric John as saying that there had been ‘significant indications that the Russians were trying to use bribes to influence the outcome of the case,’ and mentioning that ‘there have been disturbing indications that Bout’s and Russian supporters have been using money and influence in an attempt to block extradition.’

Some officials speaking at the IACC said that they hoped the meet would spur Thailand into ratifying the UNCAC. Yet the reality is that the Convention isn’t necessarily as central to addressing graft as some of its adherents claim it to be. For example, the KPK in Indonesia would have seen its powers watered down if Jakarta adopted the UNCAC, as this would have led to the removal of the KPK's powers to prosecute, de-clawing the country's anti-graft body and no doubt pleasing the officials and politicians who have been plotting to undermine its effectiveness from the get-go.

More effective, some argue, might be the Cardin-Lugar legislation included as part of the Dodd-Frank Wall Street Act in the United States. Karin Lissakers, director of RevenueWatch, described the new law as a major development, saying that ‘it covers 29 of the 32 largest oil companies in the world.’ Once implemented (expected as early as April 2011), all companies listed on the Securities and Exchange Commission will be required to disclose payments made to foreign governments. Burma, ranked as the most corrupt country on earth by TI and ruled by a junta funded by oil and gas revenues, will be spotlighted by the new laws, with companies such as Total and Chevron perhaps being forced to reveal how much money they have given to Burma's generals.

For those corporations involved in extracting oil and gas from some of the world's most opaquely-governed countries, disclosing such payments could be deeply embarrassing for all concerned. That said, with the final terms of the legislation still not yet clear, an intense period of Washington Beltway lobbying seems inevitable.

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Simon Roughneen is an Irish journalist currently in southeast Asia. He writes for Financial Times, Los Angeles Times, South China Morning Post, Asia Times, The Irrawaddy, ISN, Sunday Business Post and others.