Hong Kong handover: Rising fears of slow invasion of corruption from across border

Imagine this scenario in post-1 July 1997 Hong Kong. A politically well-connected mainlander, perhaps one of the "red princelings" from a top official's family, is eyeing a lucrative business opportunity in Hong Kong.

On the mainland his political or party connections would make it a done deal, even if others were interested. In Hong Kong he has to be more subtle, but he gets the message across that if things do not go his way the company may face hitches in its expanding mainland businesses. Thus the level playing- field starts to tilt towards a new sovereign power. "In the past we were worried that Hong Kong's corrupt style would affect us - now the situation has been reversed," China's Foreign Minister, Qian Qichen, said recently.

In the Sixties and early Seventies, Hong Kong's civil service was a hotbed of corruption. It took a big clean-up campaign, and the establishment of the Independent Commission Against Corruption (ICAC) in 1974 to purge the sleaze.

Surveys show fears of a slow advance of corruption across the border concern Hong Kong people more than China's abrupt disbandment of the elected Legislative Council. "They are willing to tolerate intolerable restrictions on freedoms ... but not corruption," said Michael DeGolyer, a political scientist at the Baptist University of Hong Kong. "We asked people which post-1997 aspects worried them most in July 1996, December 1996 and February 1997. It [corruption] was number one," he said.

Business surveys paint the same picture. A Jiji news agency poll showed 60 per cent of 183 Japanese firms in Hong Kong expected corruption to increase and feared Chinese firms would get preferential treatment over foreign companies. Even pro-Peking figures have been vocal. The former chief justice, Yang Ti-liang, who ran in the chief-executive selection, said: "As our exchanges with the mainland, particularly the southern part of China, increase, the trend will infiltrate Hong Kong. This is difficult to resist."

With Hong Kong accounting for 60 per cent of foreign investment in mainland China, its businessmen have great experience of how across-the-border contracts do not get signed, bureaucracy does not get cleared, and problems with the vast security apparatus are rarely averted without bribes.

Peking recognises corruption is endemic, but crackdowns are stymied by corrupt officials. There are many paths down which the problem can spread to Hong Kong. China's provincial cadres have their sights set on Hong Kong as a place to expand their business empires, and with Hong Kong again part of China they may assume that business ethics are equally flexible.

Senior mainland officials and their families could start behaving as if they are above the law in Hong Kong, just as they are in China. Hong Kongers with excellent Peking connections may assume they too now have some protection. And, if something shakes the confidence of Hong Kong, uncertainty about the future could persuade civil servants and police officers to be tempted by quick money. While Mr Qian pointed to "the building of socialist spiritual civilisation" as the answer to mainland corruption, Hong Kong would rather put its faith in the ICAC.It has been building links with Guangdong, across the border, which produced results in 1993, when a smuggling racket was broken and 17 stolen Hong Kong cars discovered in containers being driven into China; 24 people, including 10 Customs officers, were arrested.

It is still unproved, however, whether the ICAC would have the might and freedom to investigate a suspected well-connected mainlander working in Hong Kong. Peking can put enormous pressure on Tung Chee-hwa, the Chief Executive, if an ICAC investigation starts to look embarrassing for the sovereign power. And Hong Kong's media may find itself less inclined to report mainland-linked corruption cases. In Shenzhen, bordering Hong Kong, there was some effort to promote a cleaner image in the run-up to the handover. Under new regulations, Shenzhen cadres will have to declare their assets once a year, reporting all sources of income, business investments, ownership of property and cars and gifts they have received. The information will not, however, be published, as it is in Hong Kong.

Tung's vision

Hong Kong's new order got down to business yesterday, as Tung Chee-hwa, the new Chief Executive, held one of the biggest press conferences ever held in the territory, writes Stephen Vines.

He was reluctant to spell out his plans, but insisted the main priorities were housing and education. He also made it clear that although dissent would be tolerated, there would be limits. The conference followed an award ceremony, where Mr Tung handed out honours to those who had worked for reunification.