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