Corruption, wealth and big business

“August 21 - Vietnamese police have arrested one of the country’s wealthiest bankers over undisclosed financial crimes, triggering sharp falls on stock markets in the economically troubled nation”.

This brings to mind a recent case on our own doorstep which has been silent for a while – the bribery case against the billionaire Kwok brothers who are joint chairmen of Sun Hung Kai Properties, the biggest and richest property developers in Hong Kong. A pity, as we all love to read about anti-corruption cases against the rich and powerful, fulfilling an emotional desire to see the mighty fall from grace. As a researcher (and Dutchman), I prefer to put emotions aside and look into the deeper economical and psychological significance of the case, and significant for the wealth of Hong Kong it is.

Corruption is the abuse of entrusted power for private gains and it is one topic that generates high emotions in societies – municipal corruption was the primary cause of self-immolation by Mohamed Bouazizi, a Tunisian street vendor, which subsequently ignited the Arab Spring in 2011; party corruption is the main reason for many village protests in China; and bankers’ corruption triggered the Occupy Wall Street movement. The background of these protests is diverse, but their message is the same: more transparency and accountability is needed from our leaders, bankers and businessmen.

Corruption is linked to red tape and overregulation, hence it is no surprise that the degree of corruption correlates with the ease of doing business which is in turn linked to the wealth of nations: poor countries are in general corrupt and corruption begets poverty. However, as with poverty, corruption is not a natural disaster nor is it caused by culture, climate or religion – it is simply the consequence of bad governance. Hong Kong and Singapore were very poor after WWII with endemic corruption accepted by most as part of life. It was a major social problem in Hong Kong: ambulances would demand ‘tea money’ for picking up a sick person, hospital amahs would ask for tips before giving patients clean sheets and the Police Force wouldn’t act if victims didn’t pay.

To combat corruption, the Independent Commission Against Corruption (ICAC) was established in 1974. In those days, 8 out of 10 graft complaints were against public servants; nowadays the number is only 3 out of 10. Hong Kong, together with Singapore, now have one of the cleanest governments in the world, as depicted by the blue spots in a sea of red in the map below. This map can also be viewed as the world’s divide between rich and poor.

Click image below to enlarge.

All over the world, anti-graft cases in the private sector have been on the rise in recent years and in Hong Kong these now accounts for 70% of all anti-corruption cases. If Hong Kong wants to remain clean and rich, it has to keep fighting corruption; even a slight hint of corruption is enough to trigger an investigation, as happened to former Chief Executive Donald Tsang when he became too cozy with the rich and powerful during his tenure. In a city where wealth is regarded as a measure of success and luxury as a degree of sophistication, the lives of the rich and powerful become subject for scrutiny and public gossip. Thankfully the press, the public (particularly via social media) and the ICAC are keeping close tabs on this, something which is only good for Hong Kong and its many small businesses, the main drivers of wealth and benefactors of a clean society.