Ying Shang
Introduction
Hong Kong provides a case study in which rampant corruption by govern- ment officials was brought under control within two decades. Most studies of corruption control in Hong Kong argue that the government’s unique strategies played the most important role, e.g. rigorous legislation (unex- plainable wealth is an offence) and the creation of an independent anti- corruption agency.1Those strategies have been widely employed around the world, but they have not been as effective elsewhere as in Hong Kong.2 Furthermore, a historical review of the strategies reveals that some of them were initiated in the post-war period when corruption was most rampant, but did not make substantial changes until the 1970s. Why similar strategies vary in effectiveness in different places and periods of time is still a puzzle to both government officials and scholars.
This study explains the puzzle with an analysis of regime type and its impact on strategies of corruption control and their effectiveness. The study argues that regime type not only shapes anti-corruption strategies, but also leads to divergent results for similar corruption control mechan- isms. To develop this argument, the chapter examines the development of corruption control strategies in Hong Kong since World War II, dividing the inquiry into two stages: (1) corruption control under British colonial rule prior to the 1970s; and (2) corruption control under a fully legalized regimeafter the 1970s.
Hong Kong experienced an age of ‘syndicate’ corruption after World War II. Despite the effort of the post-war colonial government to curb rampant corruption, both the existing strategies, such as cadetship, and newly initiated ones, such as an independent anti-corruption agency, failed to take effect, while the separation of powers among major government branches was greatly reduced in the transition towards self-rule govern- ment. A fully legalized regimewas established by the early 1970s, charac- terized by a separation of powers among the judiciary, the executive, the civil service, and a special law enforcement agency.3The establishment of the separation of powers reinforced the checks and balances among them
and promoted the newly initiated strategies, including an independent anti-corruption agency, the regulation of power, a meritocratic civil service, and a mass reporting system. In the past ten years Hong Kong has become one of the leading governments in the world in official integrity.
The chapter is divided into two parts, which examine the prevalence of corruption, the strategies employed, and the impacts of the regime change in the two periods.
An age of ‘syndicate’ corruption
After World War II, corruption in Hong Kong developed into ‘syndicate’
corruption, in which all the officers in a government unit or section were involved in taking graft, viewing it as a ‘collective enterprise’. Despite widespread abuse of power in the post-war colonial government, it was tolerated by the public and the local media kept silent until the early 1970s. Although the Hong Kong government had been trying to tackle this problem, corruption remained prevalent among government officials in the post-war period. To further illustrate the ineffectiveness of corruption control during this period, this section reviews the characteristics of ‘syndi- cate’ corruption, the public’s perception of it, and the political impact of corruption in the post-war years.
‘Syndicate’ corruption
Ernest Hunt was the superintendent of the homicide squad in the Royal Hong Kong Police until 1974, when he was sentenced to jail for receiving bribes of HK$6 million (about US$1 million in 1960s) over his 18 years of service. In telling his story of a penniless but honest Glamorgan constable who became a corrupt millionaire policeman, Hunt revealed a general picture of ‘syndicate’ corruption in Hong Kong.4 ‘I believe that a large number of the police in Hong Kong are corrupt. Being “on the take” is a way of life. It is as natural as getting up in the morning and going to bed at night.’5
‘Syndicate’ corruption in Hong Kong refers to ‘a group of officers involved in the collection and distribution of money’.6It differs from other forms of collective corruption in that it usually involves all the senior officers as well as the rank-and-file in a government unit. Membership in the group was often involuntary, and taking graft was organized as an
‘enterprise’.
Syndicated corruption made most of its money from gambling, followed by prostitution and drugs, all of which were illegal in Hong Kong.
Nonetheless, these ‘businesses’ were allowed to continue with the direct knowledge, and, frequently, the participation of, the police. The linchpin of most syndicates was the detective sergeant, usually a Chinese officer, and more often than not he was the boss of an illegal business. He also 122 Ying Shang
needed the cooperation of his British superiors, so he regularly paid off senior officers in the section as well as fellow officers who joined his ‘busi- nesses’.7Virtually every police division had at least one syndicate in opera- tion; some divisions had several. During the heyday of corruption, the money collected by the syndicates amounted to hundreds of millions of Hong Kong dollars annually.8Syndicates also recruited the new arrivals. A new arrival who refused to join would be transferred to a ‘barren’ district.
Never stand in front of the bus!
Given the widespread syndicate corruption among government officials, the average person in Hong Kong found it wiser to accommodate the problem than to fight against it. ‘Corruption is a bus – you may get on it, you may run alongside, but never stand in front of it.’9 This belief was widespread in Hong Kong until the 1970s.
Tolerance of corruption could also be found among the local Chinese elite, who traced it back to patronage practices in imperial China. A
‘highly educated’ Chinese lawyer in Hong Kong responded to Justice Blair-Kerr’s inquiry by suggesting that
a Chinese in Hong Kong is more ready to pay a bribe . . . without thinking of any moral issue . . . corruption and bribery in Chinese history was not confined to the uneducated. It was rampant amongst the educated who had been appointed to office through Imperial Examinations. Similarly, . . . corruption in Hong Kong is just as preval- ent in the more educated class.10
Social unrest
Despite the public tolerance of corruption, public grievances gradually accumulated, and finally came to a head in the Godber scandal. Political instability and popular protests have been very rare in Hong Kong’s history.11 However, the 1973 Godber corruption scandal brought people from all walks of life into the streets, and public confidence in the colonial government plummeted. The political chaos that ensued after this corrup- tion scandal revealed the extent to which corruption had been fuelling public indignation.
Peter Fitzroy Godber was the police chief superintendent and a former commander in the Kowloon district. He had come under investigation for corruption in 1973 because he transferred several million dollars to his foreign accounts just before retirement. Despite all the security that had been assigned to track him, Godber sneaked out of Hong Kong just before he was officially arrested, and headed home for Britain, where there were no laws that would convict him simply because of ‘unexplainable wealth’.12 News of his escape buzzed through the community, causing a public Hong Kong: corruption control 123
uproar in a population that had long suffered from rampant corruption.
‘Fight Corruption, Arrest Godber’ became the unanimous public cry. It was widely believed at the time that if Godber had been found not guilty, it would have caused a signal for a local disturbance.13 T. Wing Lo even called it ‘a crisis of [British] hegemony’.14
Corruption control under post-war colonial rule
Corruption control has always been an important issue on the agenda of Hong Kong’s government, even in the post-war period when corruption was rampant. The Prevention of Corruption Ordinance of 1971 established more rigorous legal standards than had previously existed under the British legislation.15 This was a significant lag given that the first special law enforcement agency devoted to corruption control in Hong Kong was established in 1952. However, the ineffectiveness of the efforts under post- war British colonial rule was in striking contrast to the success of the fully legalized regime that replaced it in the 1970s.
After World War II, the British policy on colonial rule underwent a transformation towards democratic self-rule. The transition weakened the checks and balances in Hong Kong government, and strategies of corrup- tion control became increasingly ineffective.16 Localizing the government gave expatriate officers discretion over the assignment of government offices and reduced the checking mechanism on these administrators. In addition, the expansion of government invalidated the ‘small government’
strategy that had been implemented to reduce the opportunities for cor- ruption. Finally, the social desegregation between cadets and local community, as a direct consequence of government localization, dissolved the moral constraints on the desire for private gain. The following sections further examine these impacts.
Localizing the government and dysfunctional checks and balances
A separation of power and checks and balances among the judiciary, exec- utive, and civil service was established in Hong Kong under British colo- nial rule. The British government appointed the chief justice with tenureship, while the Governor of Hong Kong appointed the local judges.
Judges had the right to review local legislation and administrative decisions.17The civil service also was separated from the executive in 1861 under Sir Hercules Robinson, then governor, with the introduction of
‘Hong Kong Cadetships’. The cadetship programme recruited civil ser- vants through a competitive examination of educated young men from the British Isles to act as interpreters, who could be promoted to be depart- ment heads after a certain number of years of service. Before 1861, offi- cials had been recruited from ‘all sorts and conditions of mankind, many 124 Ying Shang
being naval or military officers’, and nepotism prevailed until the cadet- ship built up a public administration in Hong Kong.18 The cadetship replaced patronage and nepotism with a meritocratic recruitment system, which reduced opportunities for abuse of power.
The civil service localization, initiated in 1948, weakened the separation of powers and the checks and balances. Law enforcement branches started to lose their autonomy from the executive and became unable to carry out their checking function. The principle of localization meant that local candidates had priority over the expatriate officers and no expatriate officers could be enrolled unless there was no qualified local candidate.
Localization almost destroyed the cadetship, and afforded department heads much more authority to influence civil service recruitment and promotion.19As the case of Godber revealed, it had become a routine to take bribes in return for promotion to a higher, more profitable position.
Transferring out officers who refused to join the corruption syndicates also became a common practice, thus allowing corruption to continue unfet- tered. Once a chief detective in the Corruption Investigation Department spent HK$150,000 (about US$25,000) to transfer his divisional superinten- dent.20
The post-war Hong Kong government tried to solve the problem by establishing the first specialized law enforcement agency on corruption control – the Anti-Corruption Branch (ACB). However, the lack of sepa- ration of powers between the executive and law-enforcing branches pre- vented the newly initiated agency from being independent.
The ACB remained a small unit under the Hong Kong Police, while the police was the most corrupt department in Hong Kong, and obviously departmental interests conflicted with anti-corruption efforts. Although the Hong Kong Police remained the largest law enforcement agency, the ACB’s maximum enrolment was no more than 34 officers. Nonetheless, the corruption syndicates the ACB was tasked to investigate were often several times larger than its total strength.21Moreover, the ACB did not have permanent officers and most of them would be transferred back to other police departments after certain years of service. Being afraid of retaliation after ACB service, officers were less willing to carry out investi- gation vigorously, especially when the case involved their colleagues.
Expanding government powers and not reviewing obsolete rules
The colonial government had been using a strategy of small government, in which the functions of government were limited, thereby reducing opportunities for corruption: the more government services are provided, the more opportunities there are for the abuse of power. When the British took Hong Kong in the 1840s, it was mainly to serve commercial purposes.
From 1947 to 1980, the government had only 30 departments, most of which discharged multiple functions. For example, the police were not Hong Kong: corruption control 125
only in charge of social security, but also immigration and transportation until 1961. The total number of Hong Kong government employees was less than 24,000 in 1955, while they governed more than 2.5 million people.22The strategy of small government became increasingly problem- atic as the population grew rapidly from one million before World War II to more than three million in 15 years.23 While the government could barely meet the basic social demands, the strategy of small government resulted more often in law-breaking rather than law-abiding. When the government started to expand, the new posts provided a greater opportun- ity for those in public office to seek private gain. The expansion of public housing projects was followed by a surge of corruption in the Public Housing Department, which had the second largest corruption syndicate after the police.24
Another consequence of government expansion was the failure to establish adequate rules and regulations to control opportunities for cor- ruption. The colonial administration had been highly centralized before the 1970s. The secretariats in the Executive Council supervised all govern- ment branches, and made decisions affecting all aspects of life in Hong Kong. This centralized system was designed to ensure that the governor stayed fully informed of all situations and was in a position to exert effect- ive control when necessary. However, the system became increasingly inefficient as the volume of business grew. Given their lack of decision- making authority, junior officials would pass along disputes for resolution to more senior officials, and the major secretariats were soon overloaded with paperwork. Once the secretariats were overwhelmed by items that needed immediate decisions, they barely had time to consider longer-term issues, such as reviewing outdated regulations, finding loopholes in government service regulations, and checking exercise of delegated power by junior officers. Moreover, a lack of standardization led to delays in government services, which encouraged the use of bribery to speed up bureaucratic procedures.25
Desegregation and declining morale
In addition to the rapid growth of opportunities for corruption, the declin- ing moral constraints in the public services also contributed to rampant corruption in the post-war colonial service. Although the self-discipline of the British colonial service had been widely acknowledged for over a century before World War II, the presence of upstanding officers in Hong Kong after the war was greatly reduced. One major reason for the deterio- rating sense of ethics in the civil service was the desegregation between cadet officials and the local community during the civil service localization.
It was an unwritten rule of the cadetship in Hong Kong before World War II that cadet officials remain socially segregated from the local community.
Cadets did not marry into the Chinese, Eurasian, or Asiatic communities, 126 Ying Shang
for a mixed marriage would have affected their careers.26This social segre- gation had two salutary effects on corruption control in Hong Kong. First, reducing personal connections with the local community prevented cadets from being forced by local relatives to indulge in nepotism, which easily led into self-profiteering through abusing government offices. Second, and more importantly, it helped cadets to maintain a higher ethical standard than was common in either Chinese or European society. Along with their superior education came a sense among the cadets of a higher moral code that should be adhered to as part of their pride.
One of the side-effects of localizing the colonial government in post- war Hong Kong was to eliminate segregation by providing more equal opportunities for local officers. By 1952, more than 95 per cent of the civil servants in Hong Kong were Chinese.27 One of the greatest distinctions between the local officials and overseas officials was a difference in ethical standards. For example, there was a police subculture in Hong Kong, which worshipped Kwan-ti (Guan Di) as the professional god of the police.28This religious practice valued brotherhood above all other public obligations, and had been widely used as a means to cultivate cohesiveness within the corrupt syndicates.29 The localization of the colonial govern- ment abolished the segregation between the Hong Kong cadets and the local officers, and the cadet’s long-held ethics declined as well. This is why most expatriate officers who had became corrupt in post-war Hong Kong defended their behaviour by saying that everyone else in Hong Kong was even more corrupt. When the government eventually decided to take deci- sive action against corruption, the police organized large-scale protests and threatened a police strike that would paralyse Hong Kong’s public security system.
A leading government in curbing corruption
After two decades of painstaking efforts by the Hong Kong government, syndicate corruption was eliminated from all government departments.
Today corruption cases occur almost exclusively in an opportunistic and individual form. Public tolerance of corruption dramatically decreased when the actions of the anti-corruption agency proved the government’s determination to curb corruption. More than ten international NGOs, including the Freedom House and Transparency International, have ranked Hong Kong high on official probity.30ICAC has become virtually thebrand name for corruption control agencies. Although corruption cases involving senior officials have occasionally been investigated in Hong Kong since it was established in 1974, none of them has caused a major political crisis.
Hong Kong: corruption control 127
Elimination of syndicate corruption
The Independent Commission Against Corruption (ICAC) is an indepen- dent corruption control agency, which was separated from the Hong Kong Police in 1974. When the ICAC was first established, the immediate aim was to ‘break the back of the organized, syndicated corruption within the next year or two’.31 By 1977, the director of the ICAC, J. Cater, proudly declared that no major corruption syndicates were known to exist at that time.32Illegal gambling used to be a major source of income for corruption syndicates, and Cater reported that for ‘much of the year 1977 no major (illegal) casinos were in operation’.
After the ICAC was established in 1974, it received 3,189 reports of cor- ruption that year, 86 per cent of which concerned government departments.
In 1988, corruption reports concerning the private sector exceeded reports of government corruption for the first time, and by 2001 the percentage of corruption reports concerning government departments had dropped below 50 per cent of total reports. While the numbers of reported corrup- tion cases have continued to rise and reached an unprecedented high of 4,476 in 2001, reported cases in the government sector have remained roughly stable at one-third of that number (see Figure 6.1). In 2001, cases concerning the police dropped 15 per cent and cases in other departments dropped 5 per cent.33After the East Asian financial crisis, reported cases saw a sharp increase in the next year, but the Commissioner’s Report found that ‘the biggest contributing factor was a leap in the number of reports which were straightforward or of a simple and minor nature’.34
Zero tolerance of corruption
Since 1977, the ICAC has required non-government organizations to carry out mass surveys as a major indicator of the effectiveness of their corrup- tion control strategies. By 1988, these surveys were conducted biannually, and then increased to once every year in the 1990s.35The majority of inter- viewees were long-term residents of Hong Kong. The 1984 survey inter- viewed 1,043 valid households, more than 90 per cent of whom had been living in Hong Kong for over ten years.36
One of the survey questions asked was ‘How widespread is corruption thought to be in the government?’ In 1977, approximately 38 per cent of the respondents believed that corruption was widespread in most govern- ment departments. The number had dropped to 5.8 per cent by 1984.
The survey question has been changed to whether corruption is ‘very common, quite common, or uncommon’ in Hong Kong. Some 8.5 per cent of the interviewees believed that corruption was very common in 1994, and the number dwindled to 1.4 per cent in 2001. At the same time, people who perceived corruption to be uncommon in the government rose from 30.1 per cent in 1994 to 67.4 per cent in 2001.
128 Ying Shang