What If Mr. Wang of The CCDI Comes For Your Daddy?

Mr. Wang Qishan is a member of China’s seven man Politburo Standing Committee – sort of their equivalent of Nigeria’s FEC. He is also the Secretary of the Central Commission for Discipline Inspection (CCDI) – think of this as China’s EFCC.

Given that China has only one party, everyone in government from civil servants to ministers to the President – is a member of the 80 million member strong Communist Party. What this means is that from the time you sign up as a member of the party, you are subject to the rules and regulations as enforced by the CCDI; take it or leave it. The CCDI is supposed to be a way by which the Communist Party cleans itself and prevents decay.

But as with all things, it ends up depending on the leadership of the country and how seriously they want to deal with corruption. China is deeply corrupt although not as visible as Nigeria (policemen don’t take bribes on the highway) and certainly their corruption is of a higher quality than the variety you find in Nigeria as I tried to explain in a previous piece here.

Enter President Xi Jinping – or Xi Big Big (习大大) as Chinese people have taken to calling him. In January 2013, a couple of months after taking office, he declared that his government would go after ‘flies’ (low ranking civil servants) and ‘tigers’ (ministers and big boys). Nothing new there as every Chinese leader always declares war on corruption. He said:

We must uphold the fighting of tigers and flies at the same time, resolutely investigating law-breaking cases of leading officials and also earnestly resolving the unhealthy tendencies and corruption problems which happen all around people.

The style in which you work is no small matter, and if we don’t redress unhealthy tendencies and allow them to develop, it will be like putting up a wall between our party and the people, and we will lose our roots, our lifeblood and our strength

If President Xi was serious about this, it was going to be a big job for Wang Qishan. So more than 2 years after the Tigers and Flies campaign started, how has it fared? Here are some highlights

1. Previously, there was an unspoken rule in China that members of the Politburo Standing Committee do not get investigated for corruption. Zhou Yongkang became the first Tiger to fall to Mr. Wang’s campaign. When you consider that China is a police state, someone who was in charge of the entire internal security apparatus must be an extremely powerful person. He also previously headed the China National Petroleum Corporation, the world’s largest employer (currently 3.2m people).

Last week, Mr Zhou was sentenced to life in prison after having assets worth $14bn seized from him.

2. In September 2013, the much publicised trial of Bo Xilai came to an end and he was sentenced to life imprisonment. He had previously been a Minister and then Governor of one of China’s fastest growing provinces, Chonqing, and had ambitions to make it to the Politburo Standing Committee someday. He was charged with taking bribes of $3.5m and had all his assets seized (including a $7m villa in France) upon his conviction.

3. What about the flies? Boy oh boy…Mr Wang has gone after them relentlessly. Each year breaks the record of the previous one in terms of convictions and investigations. This is how he started his job in 2012

One story goes that at a meeting of the party’s Central Commission for Discipline Inspection (CCDI), convened after Mr Wang took charge of it in November 2012, senior members—themselves among the most feared officials in the party—were presented with dossiers of their own sins. Mr Wang’s aim, it appeared, was to terrorise the enforcers themselves. Failure to uncover high-level graft, he has warned them, would be “dereliction of duty”

In 2014, 200 of the CCDI’s own investigators were punished. In 2014, the CCDI had investigated and punished 232,000 civil servants at all levels – both federal and state. This was 30% more than the numbers punished in 2013. The campaign has been intensifying rather than waning as the chart below from the FT shows

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4. An interesting effect of Mr Wang’s crackdown on the civil service is that it has reduced the desirability of those jobs:

For the most recent annual exam for the national civil service, held on November 30th, there were 1.4m applicants, 110,000 fewer than the previous year. Of those, more than one-third failed to show up. There were 40 test-takers for each available position, the lowest ratio in nine years. As recently as 2010 it stood at 59:1. Recent opinion polls have found respondents born in the 1990s to be much less keen on civil-service careers than their elders.

And this:

A Chinese job-search website, Zhaopin.com, reported that in the three weeks after the lunar new-year holiday in February more than 10,000 government workers quit their jobs to seek greener pastures, mainly in the finance, property and technology industries—an increase of nearly one-third over the same period in 2014. The company attributed this to a new emphasis on frugality in government work. Lavish meals are now banned (much to the chagrin of restaurants, which have suffered falls in profits). Governments are no longer allowed to build fancy offices for themselves. Stricter controls have been imposed on the size of ministers’ offices and temperature settings in government buildings. The receiving of gifts and donations of cash, once common features of bureaucratic life, has become far riskier

Future corruption is even being reduced as those who wanted to go into the civil service to steal money are now abandoning the idea.

Mr. Wang apparently organises ‘prison tours’ where he takes serving civil servants (along with their wives) to visit their former colleagues who have been convicted. The message is of course clear – e fit be you o.

Nearly 70 civil servants have committed suicide since the beginning of 2013, usually after they were placed under investigation. More than 60 people at Minister rank have also been convicted.

5. China’s ‘private sector’ is more or less an arm of government. As my previous post showed, Mr Wang’s CCDI went after Lunatic Liu at the Railways Ministry. He has also relentlessly gone after the Chinese version of the NNPC – the CNPC. In fact, the CCDI’s investigations have now been built into the operation of the CNPC:

At China National Petroleum Co, the state-owned parent of listed PetroChina, so many senior executives have been detained that the company has established a reporting system in which top officials check in with department heads daily, according to Chinese media reports.

If any of them drop out of contact they are assumed to have been detained by the CCDI and are replaced the following day by a preapproved successor.

This arrangement reflects the extraordinary power wielded by the CCDI, a highly secretive extralegal body that has no formal right to arrest or press charges but which can investigate and indefinitely detain any of China’s 87m Communist party members.

Once a CEO of a private company disappears, the shares of the company tank as people assume the CDDI has picked the person up. A funny example of this happened a couple of weeks ago to a company called Hanergy Thin Film Power had $18bn of its value wiped off the stock market in about 30 minutes when the Chinese billionaire owner of the firm, Li Hejun failed to turn up at its AGM. 

It turned out he had been merely engaged elsewhere but no one was waiting to find that out.

6. The giant Chinese pig industry has not been spared. One way corruption is carried out in China is by wining and dining government officials with very expensive meals which always contain pork. As Mr Wang and the CCDI have cracked down on corruption, these expensive meals have lost their appeal as the risk of being caught in a restaurant while stuffing your face has greatly increased.

In a recent newsletter, China’s leading pork industry analyst explained why hog prices are still depressed in that country after two years of shrinking animal inventories.

In his Soozhu.com newsletter, analyst Feng Yonghui observes that Chinese hog producers are confused as to why prices have not bounced back after two years of declining hog numbers. Feng describes the downsizing as a structural response to the anticorruption campaign and economic downturn that have roiled markets in China over the past two years.

Feng estimates that the anticorruption campaign (launched December 2012) popped a bubble equal to 10% of pork consumption. He estimates that before the anticorruption campaign, 7 out of 10 pigs were consumed on family dinner tables, and the other 3 pigs were supplied to restaurants and cafeterias. He estimates that the anticorruption campaign eliminated 1 of the latter 3 pigs. In other words, it popped a bubble equal to 10 percent of demand for pork.

While the bandits and economic parasites (who are ‘into oil and gas’) in Nigeria continue to buy private jets for themselves, their wives and their girlfriends, here’s what’s happening in China:

Yet a government crackdown on corruption and a creeping anti-luxury climate under Chinese President Xi Jinping may be changing that.

Underscoring the risk to suppliers, the Chongqing Youth Daily, citing unnamed industry sources, reported yesterday that 30% of outstanding orders for private jets have recently been canceled as part of a “chain reaction” tied to a government crackdown on corruption.

It’s not just second-thoughts among new buyers that may affect the market in 2015.  Existing owners of private jets are also less willing to hold pricey symbols of wealth at a time when government leaders are emphasizing frugality in everything from architecture to salaries at state-owned companies.   As a result, as much as 20% of China’s existing fleet of private jets — including corporate jets — could be for sale, one industry executive recently told Forbes.

Luxury goods too:

All of this news is likely worrisome to luxury companies, which have seen a significant slowdown since the start of the anti-graft campaign. Bain & Company reported a negative 1 percent growthrate for the China luxury market in 2014,  marking a third year of the industry’s slowdown after the market grew by 2.5 percent in 2013 and 7 percent in 2012 (a significant decline from 30 percent growth in 2011). 

The crackdown hasn’t affected all sectors equally, however—luxury items associated with graft such as high-end spirits and watches have fared the worst, while “affordable luxury” brands geared toward China’s middle class have still seen significant growth.

Since the crackdown doesn’t seem likely to end anytime soon, luxury companies are taking a variety of measures to cope. Some are taking a cue from the success of masstige labels such as Coach and Michael Kors by going more mid-range in order to tap into the growing spending power of China’s upper middle-class consumers. This is especially true for high-end hotels and restaurants hurting from a lack of fancy official banquets,  as well as brands producing luxury versions of the Chinese spirit baijiu as sellers slash bottle prices.

Gold:

Gold demand on the mainland shrank for a third quarter as slumping prices failed to boost the purchases of bars, coins and jewellery and officials pressed on with an anti-corruption campaign.

Buying dropped 37 per cent year on year in the third quarter to 182.7 tonnes as last year’s price-driven surge in demand was not repeated, the World Gold Council said in a report yesterday

Mink:

The price of mink has more than halved in the past year after retailers in China and other big fur markets were left with surplus stocks after the bursting of the Chinese fur bubble.

Prices at last month’s auction by Denmark’s Kopenhagen Fur, the world’s biggest fur auctioneer, fell 55% to 258 kroner (£27.19) from a year earlier when Chinese demand sent prices to a record. Saga Furs in Finland said prices at its auctions also halved for mink furs. More than 30 animals are required to make a mink coat.

Salla Tuomivaara, of the Finnish animal welfare group Animalia, said: “The reason for the price drop is most probably the anti-corruption campaign initiated by the Chinese government, which discourages public servants … to accept luxury gifts.”

You might wonder at the damage all this is doing to the economy. Well, President Xi has called it ‘The New Normal‘. Make of that what you will.

7. What about corruption in the Chinese military? Mr. Wang has gone there too. Before he fell, General Xu Caihon was the highest ranking officer in China’s armed forces.

When investigators raided his house, they needed 12 lorries to carry away all the cash and precious stones he had stashed away (one problem in China is that the highest currency denomination is RMB100 so lots of cash is needed to hide loot). He had so much cash that it was reported that he gave so much to his maid and driver who in turn built houses while working for him. When the maid’s house was searched, stacks of cash were found there too.

General Xu was in charge of promotions in the armed forces so it’s not hard to see how he would have made a fortune from bribes with 2.3 million members in the forces. His trial for corruption was going on when he died of bladder cancer in March this year.

In January of this year, the People’s Liberation Army (PLA) revealed that 15 senior Generals were under investigation for corruption:

On January 15, Chinese officials announced on China Military Online the names of 16 senior military officers of the People’s Liberation Army (PLA) who were under investigation for “seriously violating party discipline,” a euphemism for accusations of graft. The Global Timesnotes that the officers under investigation are at the corps level and above and include one general, four lieutenant generals, nine major generals, and one senior colonel.

 ***

You can find plenty more on the Tigers and Flies campaign all over the internet. This blog post can’t do justice to it at all. If Mr. Wang was in Nigeria, then our people would say ‘Mr Wang is working, CCDI is working’. The campaign has been vicious and it has been relentless.

And yet this is a country that has lifted 600 million out of poverty in 30 years and where development and progress is visible to the naked eye (Please go through the photos in this article Here. Ignore the Russian text). Corruption has not held back development per se.

Observe, as a random example, the ongoing corruption scandal at the Bureau for Public Enterprises (BPE):

Investigations by TheCable have uncovered retrospective payments of insurance premiums totalling N27 billion for “cover” not provided to the defunct Power Holding Company of Nigeria (PHCN). In insurance parlance of “no premium, no cover”, there can be no insurance cover if premium is not paid ab initio, but the BPE and the ministry of power may have succeeded in developing a new practice in which premium is paid years after cover is provided.

A director at the ministry said: “Cover starts the day premium is made. How can you make payment for cover that was not provided? How can you ask for premiums to be paid when PHCN has already been liquidated? The conspirators engineered memos to their principals which were quickly approved and monies disbursed.

What is this shit? A country that cannot engineer bridges or roads is now ‘engineering memos’ to facilitate the transportation of public funds into private pockets. When you have this kind of theft going on, it is clear that people are not even thinking again.

President Buhari has a very big decision to make. As much as he needs competent hands to push his policies, he also needs a Mr. Wang to drive a serious anti-corruption campaign. Nigeria is of course a democracy so things possible in China will not be possible there. But this should by no means diminish the scale of the ambition required for the fight.

Corruption is absolutely killing Nigeria. Nothing serious can get done as things are. No matter how good a policy is, it will be suffocated if thrown into this system. And we have to be honest with ourselves that we have become a people who desperately need to change our ways, to put it mildly.

I have heard the name of one ‘mad man’ as a possible head of EFCC. A guy apparently so crazy he still drives a Peugeot 504 in 2015. Maybe he can be our Mr. Wang. That said, it is interesting to note that nothing in Wang Qishan’s history made him out to be an anti-corruption crusader – his private sector career was in banking.

But ultimately, the job belongs to Nigerians. A crackdown on corruption when Nigerians themselves remain comfortable with the culprits is unlikely to last long. These people live among us – they are people’s Daddies and Mummies.

Professor Deirdre McCloskey said it better than I ever can:

Indignation on the ground, if pervasive, stops corruption

The first step is to stop celebrating corruption, even if the person is your Daddy.

FF

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15 thoughts on “What If Mr. Wang of The CCDI Comes For Your Daddy?

  1. Let him take my daddy and my grandaddy sef if that would reduce corruption. The corruption at the level of permanent secretaries and directors is even more deadly than those of political office holders, almost like a mafia. Unfortunately, they perpetuate these evils for long because they are not restricted by a four year tenure or re-election. The only face that comes to mind when I think of a ‘Nigerian Mr Wang’ is the late Fela Kuti. But on a more serious note such a person should not be hard to find in Nigeria. If China could find a Mr Wang from amongst over a billion people, then 160 million people is a small haystack to look for and find that pin that would puncture corruption in Nigeria.

  2. China is a one-party state. CCDI is extralegal.

    I think a strong institution would be more suitable to Nigeria. Buhari also seems to think that strong/mad men have killed Nigeria’s institutions.

    There should be other more parallel anticorruption examples out there.

    1. There are.
      The problem is that there are very few examples of the scale of theft and economic terrorism that we are dealing out there. Where you can find examples (e.g Angola where $32bn oil money went missing over 3 years), you wont find any effort whatsoever being made to fight the corruption battle.

      It’s kind of like a chicken or egg situation – countries that have strong anti-corruption institutions do not have the kind of hysterical corruption we have in Nigeria.

  3. I believe the FIRS has a big role to play in the Anti-Corruption campaign as well. EFCC hardly ever recovers the full amounts stolen and there have been many court and government pardons in recent years. We need the economy to be stimulated and these funds brought back into Nigeria from the various safe havens and reinvested. Since 1998,we are still recovering loot from Abacha, imagine how many projects the sum could have financed. If we use the cat on mouse approach, many who have stocked funds offshore away will not be encouraged to bring the funds back, and let’s not even get started ion the lip service these foreign countries pay to returning stolen funds. The ICPC and EFCC need to be combined and strengthened to clean up the civil service, and the FIRS should lead the charge against former civil servants who have stolen funds. A tax recovery drive will be given the benefit of doubt as apolitical, as the EFCC drive will eventually hit a political and tribal brick wall. Using Tax recovery is how the US fights corruption, I hope we can incorporate this in our approach.

    1. Fully agree. Was discussing with a friend yesterday how some foreign investors cant understand why a Nigerian startup is looking for funding of $2m. They know that is easy money to find in Nigeria with the kind of thieves we have.

      So it doesnt give an investor confidence when he wants to put money in your country and he sees that the Nigerian money is heading in the other direction – running to Europe and America to buy properties. Instinctively he thinks ‘why are they not investing in their own country even if the money is stolen?’

  4. Another great piece; keep it up. I am picking up some tips on writing on serious subjects while keeping things light and interesting.
    Best regards and may God bless you always.

  5. Like in the conversation between Lady Macduff and her son. About what happens to traitors.

    In Nigeria there are so many corrupt people that they did form another gang to beat and hang the honest men coming after them. But God help us we will get them someday and somehow.

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  8. Hmmm if mr Wang comes for my father… it would surely be hard but at this state where the nation is I’d be very happy they did
    There are millions out there who are in abject poverty and my father is plundering the resources the state ought to use to provide for them

    The problem with the nigerian society today as it were is that the people themselves celebrates these THEIVES…so who ever’s gonna come for them has a lot to do

    I pray my wang comes for my father if his hands are not clean
    Yours sincerely,
    A Nigerian.

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