MACAU ANTI-CORRUPTION BODY STRUGGLING TO KEEP PACE

C O N F I D E N T I A L HONG KONG 002311 SIPDIS SIPDIS NSC FOR DENNIS WILDER DEPARTMENT FOR EAP/CM, DRL E.O. 12958: DECL: 09/04/2032 TAGS: PGOV ECON EFIN ELAB PREL PINR HK MC SUBJECT: MACAU ANTI-CORRUPTION BODY STRUGGLING TO KEEP PACE REF: A. HONG KONG 02143 ¶B. HONG KONG 001675 Classified By: E/P Chief Laurent Charbonnet; Reasons 1.4 (b, d) ¶1. (SBU) Summary: The Commission Against Corruption (known by its Portuguese acronym CCAC) in Macau reported at a press conference August 31 that the anti-graft body investigated 41 percent fewer cases in the first seven months of 2007 than during the same period last year. When asked the reason behind the decrease, CCAC Commissioner Cheong U reportedly replied, "we lack staff." Thus, while reports of corruption stay steady, referrals for prosecution are dropping. End summary. CCAC Work Rate Slows Behind Manpower Shortage -------------- ¶2. (SBU) The Commission Against Corruption (CCAC) in Macau reported at a press conference August 31 that the anti-graft body investigated 41 percent fewer cases between January and July 2007 than during the same period last year. From January to July 2007, the CCAC only passed seven cases to the Public Prosecutions Office for further investigation, compared to 12 between January and July 2006. In terms of the total reports of corruption received, CCAC took in 456 from January to July of 2007 and a comparable 468 in the first half of 2006. It thus appears that, while reports of corruption stay steady, referrals for prosecution may be dropping. ¶3. (C) When asked the reason behind the decrease, CCAC Commissioner Cheong U reportedly replied, "we lack staff," according to the sometimes free-wheeling Macau press. (Note: Cheong's office told poloff that the Macau Daily Times mis-quoted the Commissioner and were looking into the report.) Local papers, however, on the heels of other corruption-related stories involving senior officials (reftels),quickly pointed out that more public services (i.e., government agencies) are reporting suspicious acts to the CCAC, with the figure increasing from nine to 19 year-on-year in the first quarter, a 111 percent rise. Macau Economy Leaving CCAC in the Dust -------------- ¶4. (SBU) This apparent decrease in investigations occured at a time of sharp economic growth: The Macau Daily Times reported on the same day that Macau's gross domestic product grew 32 percent in the first quarter, the second highest quarterly growth there since its political reversion to the PRC in 1999. Investment soared by 44 percent on the back of several large-scale construction projects, including the U.S.-owned Venetian Macau. Asia's largest resort hotel, the Venetian, opened just days before the CCAC announcement; its investors aim to turn Macau from a gaming paradise into a family entertainment center and high-end retail mecca. U.S.-owned casinos setting up business in the Macau Special Administrative Region (MSAR),including the Venetian Macau, have not, however, been linked to corruption cases there. ¶5. (SBU) The Macau government knows it needs to be seen as taking a firm stance on corruption. The CCAC recently invited Macau government agency heads to join an "integrity management scheme," whereby each organization that volunteers will work with the CCAC for a period of two years to implement tailored guidelines on integrity and transparency particular to the needs of the agency, as well as conduct increased training for employees and improved reporting procedures for suspected corruption. To date, however, only ten of the Macau Government's more than 50 public services have applied to join; the deadline for applications is next week. ¶6. (C) Comment: Although Macau ranked 4th best (behind Singapore, Hong Kong and Japan) among 13 regions and countries across Asia surveyed in the Political and Economic Risk Consultancy's 2007 annual corruption report published in March, CCAC contacts--and others in and out of government there--have repeatedly told us that CCAC's capacity to deal with the rise in corruption or related cases is lagging. Concerns over government transparency and links between officials and gaming magnates are also rising alongside huge leaps in foreign investment and massive development projects in Macau; with government revenues up dramatically, many are wondering why the government does not invest more in improved governance. End comment. Cunningham