Guangdong Discusses Anti-Corruption Efforts with Visiting

UNCLAS SECTION 01 OF 02 GUANGZHOU 000695

SIPDIS

STATE FOR INL
USPACOM FOR FPA

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV SOCI ECON CH
SUBJECT: Guangdong Discusses Anti-Corruption Efforts with Visiting
USG Delegation

(U) This document is sensitive but unclassified. Please protect
accordingly.


1. (SBU) SUMMARY: The Guangdong government is targeting its
anti-corruption efforts in the areas of land transaction and
commercial development, according to Guangdong officials who met
with a U.S. delegation from the bilateral Anti-Corruption Working
Group. China's largest construction bidding center, located in
Guangzhou, has strict security procedures in place to insure that
bid evaluators are not unduly influenced. American lawyers in
Guangzhou commented that corruption is still pervasive in the
Chinese government owing in part to low salaries. END SUMMARY


2. (U) During a June 11-12 visit to Guangzhou, U.S. representatives
to the bilateral Anti-Corruption Working Group met with officials
from the Guangdong Department of Supervision and the Guangdong
Procuratorate. The group visited a construction bidding center, a
real estate registration center, and a business registration center.
The group also met with AmCham members to discuss corruption in
China. The delegation consisted of David Luna, Director of
Anticorruption and Governance Initiatives, INL; Cher Iannaccone,
Financial Investigations Division, ICE, Department of Homeland
Security; Taryn Nelson, Financial Crimes, TFFC, Department of the
Treasury; and Joseph Gangloff, Deputy Director, Office of Government
Ethics.

Provincial Anti-Corruption Efforts
--------------


3. (U) Qin Tonghai, Deputy Director General of the Guangdong
Department of Supervision (DOS),said 20,000 officials in Guangdong
work either directly or indirectly for his office. Guangdong DOS
has conducted special campaigns to better regulate land compensation
for farmers, commercial development, and government procurement.
Qin said that by the end of 2007, Guangdong will have an electronic
monitoring system in place whereby DOS can track and evaluate the
work of government offices in the province's 21 cities in real time.
Lai Xiangdong, Deputy Director General of the Guangdong
Procuratorate's Anti-Corruption Bureau, said his office handled
1,398 corruption cases in 2006: 50 percent involved bribery, 30
percent involved misuse of public money, 10 percent involved
embezzlement of public funds, and the remaining 10 percent were of
varying types. He noted that approximately 80 percent of the
Procuratorate's corruption cases end with punitive actions (usually
prison).


4. (SBU) Kong Xiangren, Deputy Director General of the Ministry of
Supervision's Foreign Affairs Department, said China - unlike the
U.S. - does not require officials to submit financial disclosure
reports. DOS and Procuratorate officials use tax records and other
financial statements in their investigations, and require that
suspects produce evidence to counter accusations of corruption.
Kong said China is currently drafting financial disclosure
regulations that will mirror those used in the United States.


5. (SBU) In an informal bilateral dialogue, Qin and Kong also
discussed ways for the PRC to intensify cooperation through possible
joint workshops (e.g., through the APEC Anticorruption Initiative)
and technical exchanges with the U.S. Office of Government Ethics,
MOS, and the newly created state-level corruption agency (announced
earlier this year by the CPC). Qin also stated that the innovative
preventive measures and IT systems that are being developed in
Guangdong to prevent and detect corruption may become a model for
the rest of China.

Visits to Bidding and Registration Centers
--------------


6. (SBU) The U.S. delegation visited a construction bidding center
in Guangzhou that handles road, subway, building, electricity, and
water projects. The center is the largest in China in terms of
transaction volume, and handles half of all bids in Guangdong,
according to the director of the center. To maintain the integrity
of the bidding process, computers randomly select evaluators from a
pool of 4,800 experts (who have outside employment). If the
evaluator is unable to take the job, the computer will select the
next name on the list. The experts are not allowed to contact
anyone while they are reviewing bids; cell phones are confiscated
and cameras monitor the rooms. If the evaluation takes more than
one day the evaluators must sleep in beds located at the center.
The evaluators are paid RMB 500 (USD 65) per day for their service.
Lin said the center is also developing a review mechanism to check

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prior bids for improprieties.


7. (SBU) The group also toured a new municipal real-estate
registration center located in Guangzhou. The center provides
services related to land transactions, property registration, and
auctioning. Computer modules set up in the center give the public
access to a real estate database. The center's director said
software advances have dramatically increased efficiency. At a
separate visit to a business registration center under the Guangzhou
Administration of Industry and Commerce (AIC),the director said
applicants can monitor the status of their cases on the internet.
In response to a question, the director noted that the center's
database does not link to other registration centers in China nor
with law enforcement authorities. (Note: Guangzhou AIC's business
registration centers were a target of a television news program
investigation earlier this year that showed officials were charging
for unnecessary services.)

American Lawyers Discuss Corruption in China
--------------


8. (SBU) During a meeting at the offices of AmCham-South China,
David Buxbaum, an Amcit who has lived in Guangzhou on and off since
1972 and currently works for an international law firm, said
corruption in China is "endemic." To reduce corruption, he said,
China needs to increase the wages of civil servants (particularly
judges) and professionalize the bureaucracy. He said bureaucrats
have too much discretion in their jobs, particularly those in the
AIC. Ultimately, the introduction of free elections beyond the
village level would have a dramatic effect on corruption levels, he
added. Fred Hong, an Amcit who helped found the AmCham in Guangzhou
and runs his own law firm here, said he is currently handling a
business dispute case in which the judge has indirectly requested a
bribe. He said China is genuinely interested in fighting corruption
and learning from the U.S. model, and advised U.S. officials take
adopt a "face-saving" approach to discussions with Chinese
officials.


9. (U) This cable has been cleared by INL's David Luna.

GOLDBERG