China’s crackdown on domestic corruption is by now widely known. But many people, including myself, have suspected that a crackdown on foreign bribery would be much slower to develop. Recent news might begin to prove us wrong.
The Wall Street Journal reports that China has announced an historic $2 billion investment in the African Development Bank.
Why is this historic? After all, China has been investing aggressively in Africa for years. But to date, China’s modus operandi was investing directly with governments — and their officials — rather than in multilateral institutions. they haven’t been deterred by governance weaknesses there, and some might say, have outright exploited those weaknesses.
Sure, China enacted an extraterritorial bribery prohibition in 2011, supposedly to honor its duties under the United Nations Convention Against Corruption. And given that China is now mounting what may be the first credible (that is, not completely political) domestic anti-corruption campaign, one might believe that a Chinese crackdown on foreign bribery is just a matter of time.
But I have long feared that there were good reasons — one cultural, the other economic — why China’s newfound commitment to reducing domestic corruption simply would not spill over to foreign bribery.
Culturally, China has generally not sought to disseminate its system — call it state capitalism, or socialism with Chinese characteristics, or what have you — across Africa or anywhere else. They’re the Middle Kingdom, and you’re not.
Economically, they are undoubtedly aware of the cruel irony of anti-bribery enforcement: the more the Organisation for Economic Co-operation and Development (OECD) nations enforce their bribery prohibitions, the greater China’s economic interest becomes in not doing the same. Our moral commitment is their economic opportunity, and they surely know it.
But I have wanted to be wrong. About all of it. And China’s new movement toward investing in the African Development Bank may well sound my skepticism’s death knell, however faintly.
In announcing the deal, Chinese officials conceded that “there may have been some phenomenon of Chinese investors that were not so good.” Read: maybe all that bribery was a bad idea after all.
One surely cannot rely on a press release to understand a government’s motivation; the moving pieces here are many. But to the extent that China has grown even slightly uncomfortable with bribing foreign officials, it’s nothing short of remarkable.
If this is a turning point, it’s ninety degrees on a six-lane interstate, a sharp turn on a high-traffic road. But it’s too early to tell yet.
Watch this space.
Andy Spalding is a senior editor of the FCPA Blog. He is an Assistant Professor at the University of Richmond School of Law.