UN companies should welcome China's corruption crackdown

VIENNA (REUTERS) - An intensifying crackdown on corruption in China is a positive development that should be welcomed by companies doing business there, and not be a source of concern, a senior United Nations (UN) crime-fighting official said on Thursday.

Some foreign firms in China are getting increasingly jumpy about a spate of corruption and anti-trust investigations by Chinese authorities and are hiring lawyers to make sure their operations comply with the law.

Graft investigations have targeted the pharmaceutical industry while authorities have also launched a major probe into China's leading oil and gas company.

Mr Dimitri Vlassis, head of the corruption and economic crime branch of the Vienna-based UN Office on Drugs and Crime (UNODC), said corporate leaders should use the campaign against graft as an opportunity for reform.

"The (Chinese) authorities are taking this issue very, very seriously and they have increased their anti-corruption drive more generally in visible ways in the past couple of years," he said in a telephone interview.

Companies should welcome this and review internal processes, he said, but make sure this was not simply an issue of complying with the law.

"It is also a matter of actually doing the right thing and engaging in competition based on a set of ethical principles, ethical behaviour," Mr Vlassis added, advocating corporate zero-tolerance of graft.

Chinese President Xi Jinping, who took office in March, has made fighting corruption a central theme of his administration.

"What I see are very important and consistently determined steps forward," Mr Vlassis said.


The biggest foreign firm in the spotlight is British drugmaker GlaxoSmithKline, which Chinese police have accused of funnelling up to 3 billion yuan (S$620.2 million) to travel agencies to facilitate bribes to doctors to boost the sale of its medicines.

GSK has said some of its senior Chinese executives appeared to have broken the law and that it has zero-tolerance for bribery.

Last month, the official Xinhua news agency reported that China was intensifying its investigation into bribery in the pharmaceutical and medical services sector with a fresh three-month investigation.

China is increasingly important for big drugmakers, which rely on growth in emerging markets to offset slower sales in the West.

Mr Vlassis declined to comment about specific investigations, but said the fact that anti-corruption "enforcement activity comes across as a source of concern is worrisome".

He said a UN anti-corruption convention that took effect in 2005, including a monitoring mechanism that become operational five years later, had helped galvanise global action.

"It is not only China. The numbers of countries that are cracking down is increasing and it is widespread," he said.

Regions making progress include Latin America and parts of Asia, Mr Vlassis said, adding there was also some "very promising first results" in parts of Africa.

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