Archive for ‘corruption’

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15/05/2013

* After ATM heist, India’s IT sector again in unwelcome spotlight

Reuters: “A breach of security at two payment card processing companies in India that led to heists at cash machines around the world has reopened questions on the risks of outsourcing sensitive financial services to the Asian nation.

The EnStage Inc. office is seen in the southern Indian city of Bangalore in this May 12, 2013 file photo. REUTERS/Stringer/Files

Global banks that ship work to be processed in India, either in-house or to big IT services vendors, were already under pressure to step up oversight of back-office functions after a series of scandals last year.

Last week, U.S. prosecutors said a global criminal gang stole $45 million from two Middle Eastern banks by breaking into the two card processing companies based in India and raising the balances and withdrawal limits.

“India is exposed in two ways: The threat that the same theft could happen in India and the fact that the outsourcing industry will also get affected,” said Arpinder Singh, partner and national director for fraud investigation and dispute services at consultancy Ernst & Young.

The episode is reopening debate on banks sending work requiring a high degree of confidentiality to offshore locations.

“It is the weakest link,” said Shane Shook, an expert with U.S. cyber-security firm Cylance Inc who has helped financial firms conduct investigations into some major cyber crimes.

“I think the lesson is they need to pull back on what they’ve outsourced. When you’re giving a third party, the outsourced entity, the ability to access credit limits or cash limits of the consumers you’re managing the finances for, you’re giving up control that is your fundamental responsibility.”

India’s $108 billion IT services industry is the world’s favored destination for outsourcing. Over 40 percent of exports by the industry are support services for the global financial sector, ranging from investment bank back-office functions to research, risk-management and processing of insurance claims.”

via After ATM heist, India’s IT sector again in unwelcome spotlight | Reuters.

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11/05/2013

* India Congress ministers quit amid scandals

BBC: “Two Indian ministers have resigned in one day over links with corruption claims, plunging the Congress party into crisis.

Former Indian Railway Minister Pawan Kumar Bansal and former Law Minister Ashwani KumarRailway Minister Pawan Kumar Bansal and Law Minister Ashwani Kumar resigned in separate incidents.Mr Bansal quit after police arrested his nephew for bribery, and Mr Kumar stepped down amid claims he influenced a report into the coal industry.Reports suggest Congress leaders are holding crisis meetings.The coalition government has been beset by corruption scandals recently.Mr Bansal called for a police investigation into the bribery allegations.”I have always observed the highest standard of probity in public life,” he told local media.”

via BBC News – India Congress ministers quit amid scandals.

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06/05/2013

* China’s Red Cross struggling to win back trust

Red Cross Society of China

Red Cross Society of China (Photo credit: Wikipedia)

Corruption even reaches into major public charity.

Xinhua: “China’s Red Cross Society used to be a major mobilizer of aid and rescue operations in natural disaster sites around the country. But after the April Lushan Earthquake, many people refused to donate through the organization. The charity’s image seems to have been seriously damaged by a series of scandals, and it’s now struggling to win back the trust.

 

For decades, China’s Red Cross volunteers have worked on many frontlines of disaster relief, providing help and hope.

But the major role of the organization is played in the office, and largely behind the scenes… the collection of donations.

When a strong 7.0-magnitude earthquake shattered China’s Lushan, the Red Cross again began asking for donations.

Yet in sharp contrast to the outpouring of aid five years ago after the earthquake in Wenchuan, this time questions have been haunting this government-run charity. The central question: where has our money gone?

In 2011, a young woman named Guo Meimei, who claimed to work for the organization, flaunted her luxury goods on social media. It immediately triggered public outrage, which lasts up to today.

China’s Red Cross’s deputy chief has tried to show that the organization is still a trustworthy one.

“This time about 1.4 billion yuan has been collected for donation for the Lushan Earthquake, and over half was collected by China’s Red Cross. Many of the donors are private-owned companies and individuals.” Zhao Baige, Executive Vice-President of Red Corss Society of China said.

But the online responses to Red Cross’s call of donation shows it is already knee-deep in a credibility crisis.

Most people say they would choose to donate to other charities, or not at all.

“I can’t find any channel I can trust to donate my money. The Red Cross has so many scandals that I don’t believe my money will go to the hand of those in need.” Zhu Na, Beijing resident said.

“I will never ever donate anything to China’s Red Cross. I’d rather go to the disaster zone on my own to donate my money. No matter what the Red Cross does, it won’t fix its image in my heart.” Tian Aijin, Beijing resident said.

Frustration and distrust. Analysts say China’s Red Cross is now in a do or die situation…

“It’s not just the Guo Meimei incident that triggered the fall of China’s Red Cross’s reputation. The problem lies in the system. The Red Cross is currently run by the Chinese government, which means it does not have to answer to outside forces like civil groups. It will take an overhaul of the system to really win back the trust of the people.” Wang Zhenyao, Dean of One Foundation Philanthropy Research Institute said.

China’s Red Cross Society was established in 1904. The organization’s deputy chief Zhao Baige says the efforts over a century have been destroyed in just three days by Guo Meimei’s incident. But the question is: how could the reputation of such a huge organization be destroyed so easily? And what can it do to restore the public faith. These questions may only be answered by real actions for years, or even decades to come.”

via China’s Red Cross struggling to win back trust – Xinhua | English.news.cn.

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05/05/2013

* ‘Speed money’ puts the brakes on India’s retail growth

Reuters: “Hong-Kong entrepreneur Ramesh Tainwala spent 18 months operating branded clothing retail stores in India before deciding it was impossible to succeed without paying bribes.

Customers exit a V-Mart retail store in New Delhi April 6, 2013. Picture taken April 6, 2013. REUTERS-Adnan Abidi

Tainwala, a 55-year-old expatriate Indian, owns Planet Retail, which held the India franchise rights for U.S. fashion labels Guess and Nautica as well as UK retailers Next and Debenhams. He sold the brands last September to various Indian businesses.

“Right now it’s not possible to do business in India without greasing palms, without paying bribes,” said Tainwala, who is also luggage maker Samsonite’s president for Asia Pacific and West Asia. Tainwala said he himself refused to pay bribes to licensing officials, though that could not be independently confirmed.

India is the next great frontier for global retailers, a $500 billion market growing at 20 percent a year. For now, small shops dominate the sector. Giants from Wal-Mart Stores Inc to IKEA AB have struggled merely for the right to enter, which they finally won last year.

But a daunting array of permits – more than 40 are required for a typical supermarket selling a range of products – force retailers to pay so-called “speed money” through middlemen or local partners to set up shop.

In interviews with middlemen and several retailers, Reuters found the official cost for key licenses is typically accompanied by significant expenses in the form of bribes. The added cost erodes profitability in an industry where margins tend to be razor-thin. It also creates risk for companies by making them complicit in activity that, while commonplace in India and other emerging markets, is nonetheless illegal.

That creates a handicap for foreign operators such as U.S.-based Wal-Mart, the world’s biggest retailer, and Britain’s Tesco Plc and Marks and Spencer Plc, which must comply with anti-bribery laws in their home countries even while operating abroad.

A Wal-Mart spokesperson said the company is strengthening its compliance programs, part of a global compliance review that has cost more than $35 million over the last 18 months. IKEA, which is awaiting final approval to enter India, has started assessing the market, a spokeswoman said, adding the group has “zero tolerance” for corruption in any form.”

via Insight: ‘Speed money’ puts the brakes on India’s retail growth | Reuters.

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02/02/2013

* Corrupt Shaanxi banker disappears with US$160 million

This disappearance will probably be the first of many.

China Daily Mail: “Posted by chankaiyee2 ⋅ February 2, 2013

Chaoyang District

In my post “Police uncover Shaanxi fraudster’s 41 Beijing properties; arrest 4 ‘accomplices’”, I told SCMP’s story of Gong Aiai, a small potato who was for some time deputy chief of a county bank. However such a small potato was found by police to have assets worth more than 1 billion yuan ($160.2 million).

Singtao Daily reports today police investigation of her started due to a post on the internet informing against her in early December.

Singtao says that Gong denied that she had such properties in an interview with chinanews.com, but later disappeared. There is rumour that she has fled abroad using her passport with fake identity.

Chinese media have made investigation and found that Gong had valuable properties in Xian and her hometown Shenmu County and owns two large hotels in Shenmu.

However, with all such wealth, Gong was not happy and tried a failed suicide last October due to pressure from her business. Her daughter who studied in Beijing was in poor health due to excessive dieting for weight reduction.

SCMP reports: “Police have uncovered the false documents of a business partner of Gong Aia. Gao Yiner – who owned properties with Gong in Chaoyang district – had two Beijing household registration papers, called hukou, and at least two identification cards listing different birthdays.

Gong, dubbed the ‘elder sister of property’ by mainland media, reportedly had four IDs and four hukou, three of which were from her hometown of Shenmu county, Shaanxi province.”

Ming Pao says, according to Chinese web newspaper yicai.com, the household registries in many areas are somewhat in a mess. They have not only become the places for police officers to make extra money by providing people with fake identities but also shelters for corrupt officials to hide their assets.

Some police officers have revealed that some party and government officials have two household registrations to keep two identities. They use their fake identities to own their ill-gotten assets, while there are no illegal assets under their true identities. In that way, they are not afraid of declaration of their property.

From this, we see Xi Jinping’s wisdom. As soon as he took over the reigns, he said he wanted to reform the letters and calls, reeducation through labour and household registration systems.

He has conducted a swift reform of the letters and calls system to prevent local officials from intercepting and persecuting petitioners and informers so that people dare to inform against corrupt officials.

He said that he would abolish the reeducation through labour system. If that system is really abolished by the National People’s Congress, local government and police will not be able to imprison people in labour camps without proper legal procedures.

As for the household registration system, I thought that he meant allowing migrant workers to have household registration in the cities they work. That will take a long time and no priority should be given to that reform.

However, reform of the system to prevent corrupt officials from having fake identities, and discovering such fake identities, will be vital to the success of Xi’s anti-corruption drive. Xi seems to have his own source of information, so that he decided to give priority to that reform.

Sources: chinanews.com, yicai.com, Singtao Daily, Ming Pao, SCMP”

via China: Corrupt Shaanxi banker disappears with US$160 million « China Daily Mail.

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02/02/2013

* China’s Environmental Protection Racket

WSJ: “Beijing’s choke-inducing air – which blanketed the city for nearly a week before being cleared away by a bout of sorely-needed wind on Friday — prompted Premier Wen Jiabao to call for action to protect the environment and public health.

If the premier and his colleagues can see through the smog on the policy front, they might consider something that has been all but overshadowed by the capital’s plight: the sorry track record of the environmental watchdog in little Nantong in east China’s Jiangsu province.

The problems in Nantong are a tale of environmental protection gone seriously wrong in a country where money clearly talks. They may also be small but critical components of an increasingly toxic environment.

According to a series of newspaper reports, online versions of which appear to have vanished into the country’s not-so-thin air, more than 30 environmental and other officials from the Nantong area were implicated in a scandal that involves bribery and turning a blind eye to pollution problems. Thanks to the reporting of the Shanghai-based China Business News (in Chinese here and here), it’s now fairly clear that Nantong environmental officials were running something closer to an environmental protection racket.

The newspaper, which had been following the story since the summer of last year, reported earlier this month that the scandal had reached the highest level of the local environmental protection bureau. Contacted by the Wall Street Journal, an official with the Nantong Environmental Protection Bureau was unable to elaborate beyond the official posting on the Nantong discipline inspection committee’s website, which stated that former bureau director Lu Boxin was found guilty of accepting bribes and sentenced to 12 years in prison (in Chinese).

This brief report, posted under the banner headline of “Study the Spirit of the 18th Communist Party Congress, Promote and Deepen the Anti-corruption Campaign and the Building of Clean Government,” said that the bribes were taken on more than one occasion.”

via China’s Environmental Protection Racket – China Real Time Report – WSJ.

See also: https://chindia-alert.org/economic-factors/greening-of-china/

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30/01/2013

* Panicked property fire sale in China amid corruption fight

Sydney Morning Herald: “Thousands of Chinese communist officials have been panicked into a fire sale of their illicit properties and billions of pounds have been smuggled overseas as the country’s new leaders intensify a campaign to root out corruption.

Corruption-fighter Chinese Vice Premier Wang Qishan in Beijing, China.

Luxurious properties are being dumped on the market in Beijing, Shanghai and Guangzhou for anyone able to pay in cash as officials try to cover their tracks. A report by the party’s anti-corruption unit, the Central Commission for Discipline Inspection, said “a wave of luxury home sales began last November and has accelerated since December”.

It said the volume of deals had intensified by “a hundred times” after Xi Jinping, the incoming Chinese president, warned that corruption could kill the party and put one of the country’s most vigorous and resolute politicians, Wang Qishan, in charge of stamping out graft.

Fu Zongmo, an estate agent in Sanya, Hainan, said his colleagues had sold two houses recently for government officials. In recent years, the tropical beaches and golf courses of Sanya have attracted plenty of speculators but recently the market has stalled.”

via Panicked property fire sale in China amid corruption fight.

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22/01/2013

* China’s Xi urges swatting of lowly flies in fight on everyday graft

Reuters: “Chinese president-in-waiting Xi Jinping on Tuesday took his campaign against corruption to the petty bureaucracy and minor infractions of lowly officials who are the bane of many Chinese people and businessmen’s everyday lives.

China's Communist Party chief Xi Jinping looks on during his meeting with U.N. General Assembly President Vuk Jeremic at the Great Hall of the People in Beijing December 27, 2012. REUTERS/Wang Zhao/Pool

Xi, in comments carried by the official Xinhua news agency, said it was just as important to go after the “flies”, or lowly people, as it was to tackle the “tigers”, or top officials, in the battle against graft.

“We must uphold the fighting of tigers and flies at the same time, resolutely investigating law-breaking cases of leading officials and also earnestly resolving the unhealthy tendencies and corruption problems which happen all around people,” he said.

Bureaucrats must not be allowed to get away with skirting rules and orders from above or choosing selectively which policies to follow, added Xi.

“The style in which you work is no small matter, and if we don’t redress unhealthy tendencies and allow them to develop, it will be like putting up a wall between our party and the people, and we will lose our roots, our lifeblood and our strength,” Xi told a meeting of the party’s top anti-graft body.

Xi called for “a disciplinary, prevention and guarantee mechanism” to be set up to prevent corruption, Xinhua said, though Xi did not provide any details.

Chinese bureaucrats have long had a poor reputation for laziness, a love of excessive paperwork and minor acts of corruption which infuriate the man on the street and add to growing mistrust of the party.

Since taking over as Communist Party head in November from Hu Jintao, Xi has vowed to root out corruption no matter how high it is, warning the party’s survival is at risk if it does not take the problem seriously.”

via China’s Xi urges swatting of lowly flies in fight on everyday graft | Reuters.

See also: https://chindia-alert.org/2012/12/03/5515/

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20/01/2013

* In China, Discontent Among the Normally Faithful

NYT: “Barely two months into their jobs, the Communist Party’s new leaders are being confronted by the challenges posed by a constituency that has generally been one of the party’s most ardent supporters: the middle-class and well-off Chinese who have benefited from a three-decade economic boom.

A Jan. 9 demonstration in Guangzhou, where people protested the censorship of a paper known for investigative reporting.

A widening discontent was evident this month in the anticensorship street protests in the southern city of Guangzhou and in the online outrage that exploded over an extraordinary surge in air pollution in the north. Anger has also reached a boil over fears concerning hazardous tap water and over a factory spill of 39 tons of a toxic chemical in Shanxi Province that has led to panic in nearby cities.

For years, many China observers have asserted that the party’s authoritarian system endures because ordinary Chinese buy into a grand bargain: the party guarantees economic growth, and in exchange the people do not question the way the party rules. Now, many whose lives improved under the boom are reneging on their end of the deal, and in ways more vocal than ever before. Their ranks include billionaires and students, movie stars and homemakers.

Few are advocating an overthrow of the party. Many just want the system to provide a more secure life. But in doing so, they are demanding something that challenges the very nature of the party-controlled state: transparency.

More and more Chinese say they distrust the Wizard-of-Oz-style of control the Communist Party has exercised since it seized power in 1949, and they are asking their leaders to disseminate enough information so they can judge whether officials, who are widely believed to be corrupt, are doing their jobs properly. Without open information and discussion, they say, citizens cannot tell whether officials are delivering on basic needs.

“Chinese people want freedom of speech,” said Xiao Qinshan, 46, a man in a wheelchair at the Guangzhou protests.”

via In China, Discontent Among the Normally Faithful – NYTimes.com.

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31/12/2012

* Report confirms blog’s power in fighting graft

This research report confirms what has been obvious for several years: the power of the Internet over formal communications channels.

China Daily: “Micro blogs, like the social networking site Sina Weibo, have improved authority’s efficiency in handling anti-corruption cases, but also pose challenges in distinguishing true from false, according to a recently released report by Shanghai Jiao Tong University’s Public Opinion Research Lab.

Of the 24 widespread micro blog reports this year, nine have been confirmed as frauds, the report said.

“The micro blog plays a major role in fighting corruption nowadays, but posts online need to be carefully sifted to find what is reliable information,” the report said.

As more netizens become familiar with and participate in fighting corruption, more messages spread each day that await authorities’ attention, said Xie Yungeng, an expert in public opinion and new media at Shanghai Jiao Tong University.

“A regulation should be established on what kind of reports discipline authorities should respond to and set time limits for their response,” he said.

“The new way of fighting corruption is testing the wisdom and ability of disciplinary bodies,” said Zhu Lijia, a senior researcher at the Chinese Academy of Governance.”

via Report confirms blog’s power in fighting graft[1]|chinadaily.com.cn.

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