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Special oil greases China's alternative mechanism

The Age

Tuesday February 1, 2011

JOHN GARNAUT

The art of guanxi functions to break down the legal and other barriers to corrupt transactions. THE art of building "guanxi" and the rituals of giving and soliciting bribes are not always the same thing in China, but they often are.One reason Rio Tinto's Stern Hu is in jail is because he was no good at it. Only an amateur would receive a bag of cash and store it in his household safe.The wheels of Chinese business and officialdom are usually greased by more experienced players. They know how to embed their favours within intricate, personalised guanxi performances which break down the moral and cognitive barriers to bribery, and also minimise the risks of being caught. They channel transactions through multiple layers and stretch them out over years and even decades.Hu Gang, who ran an auction house in Changsha in central China, is such a professional. And he has written two unmatched exposes or instruction manuals on how to do it. But even professionals can run into trouble. Hu prefers not to talk explicitly about how exactly he bribed a judge who later gave him up in a confession in an unrelated investigation.Hu has never talked to a foreign journalist before. But he does say his first book Qingci (or Celadon, written under the pseudonym Fushi), a story about an auctioneer who bribes a judge, is uncannily similar to the events that led to him spending a year in jail.Hu's auctioneer-protagonist makes the acquaintance of Judge Hou after learning of his drinking habit. He personally lugged a case of health-preserving liquor (containing a exotic aphrodisiac) up six flights of stairs to Judge Hou's apartment. After demonstrating his personal exertion, auctioneer Zhang explained the liquor as a gift from another friend which he did not want because he did not drink, and which had a value that was great but also deniable because it had not yet been put on the market.Zhang cemented the relationship when he noticed Judge Hou's concern about his son's calligraphy, and quietly arranged a famous calligrapher to be his tutor. He discreetly auctioned the son's calligraphy at a friend's auction house and instructed his friend to bid for it. Zhang handed a cash envelope to Judge Hou and reassured him that he had even subtracted an auction commission fee."It can stand any investigation," he said.It was only then, after Judge Hou was squarely in his debt and had been assured of Zhang's sensitivity and discretion, that the auctioneer broached the favour that he wanted.Li Ling, a law lecturer at Northwest University in Xian and researcher at New York University, has broken new ground by mapping how guanxi works in China for her recently completed doctorate. She has investigated dozens of first-person accounts (including Hu Gang's) and hundreds of court cases and investigation reports."As experienced guanxi practitioners often say, 'the thing is half-done once the gift is accepted'," writes Li Ling in "Performing Bribery in China", in the current edition of the Journal of Contemporary China.Gifts need to demonstrate personalised care and "sincerity" and this usually requires careful investigation of the target's golfing, artistic or other hobbies. So prices at China's art auctions are inflated by bribers paying officials for artworks at multiples of the market price, luxury golf courses are full of members who did not pay for membership, shopping centres are full of officials' relatives using shopping cards that were given to them, and Macau is full of officials who do not pay for their gambling chips.Choice of language is important, with a whole lexicon of euphemisms like "doing guanxi" available in place of vulgar words like "bribe".Li writes that the art of guanxi can function as an "alternative operating mechanism" to break down the legal, moral and cognitive barriers to corrupt transactions."'Guanxi practise' is not only 'fuelling' corruption, but it is a necessary and integral part of corruption in China," she writes.Hu Gang says not all transactions involve bribery, even in his court-based auction trade. He says commissions can be won by your good reputation in the industry, or paying a lot to a person you don't know, or making a long emotional investment in a judge."Generally, one plays the emotion card to someone from whom he or she needs help, to draw their relationship closer," explains Hu, who has now written a new book, Building Guanxi. "Only gradually, after that foundation has been laid, one will explain the help that is needed . . . One will provide reassurances about the safety of such a deal. The other side will think, 'OK, I've been eating and drinking on your account, and generally using you, and feel sorry about that'. So, when being asked for an ostensibly legitimate favour, he or she may offer a helping hand."

© 2011 The Age

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