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How Chinese Corruption Corrupts the World

Walter Russell Mead

The New York Times has an update on the U.S. trial of a Chinese billionaire from Macau accused of arranging a complex bribing scheme that funneled more than $1 million to a former president of the UN General Assembly and five others for assistance with various real estate deals.

Magistrate Judge Kevin N. Fox of Federal District Court in Manhattan ordered that the billionaire, Ng Lap Seng, may be released on a $50 million personal recognizance bond secured by $20 million in cash and an apartment he owns on East 47th Street, near the United Nations.

The judge added that Mr. Ng, a 68-year-old real estate magnate, must surrender all passports, be subject to GPS monitoring and be guarded by private security, which he will pay for.

China, like Russia, is a country based on a mix of Tammany Hall and Wild West capitalism. And like Russian oligarchs eager to stash their money where Putin can’t get at it, increasingly the Chinese mega-rich are trying to get their money where Xi can’t claw it back.

This presents tough questions for Western law enforcement. Neither Chinese nor Russian courts operate under clear legal norms, especially in cases that have political ramifications. So decisions reached by what are often kangaroo courts in these countries can’t be enforceable in the West without compromising our own adherence to the rule of law.

On the other hand, there is no doubt that large numbers of people have enriched themselves through criminal means. And as these thieves and crooks (and in more than a few cases, murderers and thugs) use Western banks and legal protections to shelter their gains, there is a serious erosion of standards of morality and legality.

It’s hard to get the balance right. Currently, the mix of offshore tax havens, devious bank transactions, shell companies and so on makes it easy for shady people to shelter ill gotten gains—and they use that wealth to buy influence in the outside world where far too many politicians and business interests don’t ask questions if the price is right. Both to fight corruption and to make it harder for drug lords and terrorists to launder money and shelter assets, we need significantly tighter standards for transparency in international finance.

When we find evidence, as in this case, that exported money from China has been used in a corruption scheme aimed at subverting institutions outside China, then the hammer needs to come down hard.

Overall, as we see in the FIFA case, and from the stench emanating from much of the UN and the IOC, an epidemic of corruption is sweeping through international institutions. Cracking down on the sources of that corruption, and putting crooks in the slammer, is a vital part of protecting the rule of law and the capacity of international institutions to serve the purposes for which they were built.

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