Graft busters could protect investors, says Trace International
Risk management provider says ICAC-like body could support infrastructure investors and protect China’s prestige in initiative’s cross-border crime hot spots
A substantial amount of capital will flow into “Belt and Road Initiative” projects over the next decade. Whether it is from Chinese state-owned enterprises, the Asian Infrastructure Investment Bank (AIIB), Silk Road Fund, New Development Bank, or institutional investors, estimates place funds running into the new Silk Road “Marshall Plan” into the trillions of US dollars.
Trace International, an antibribery business organisation and risk management provider, has documented numerous examples of corruption in the belt and road countries, and its president, Alexandra Wrage, has called for the creation of a body not dissimilar to Hong Kong’s Independent Commission Against Corruption (ICAC) to tackle the issue head-on.
“I have previously advocated for outsourcing this to the ICAC in Hong Kong, because of its sophisticated team and fierce independence,” Wrage says.
At present, few protections against corruption on the belt and road exist, and certainly little in the way of regulatory frameworks. It is hardly a surprise, given that the initiative is both new and does not consist of a coherent programme, but a series of projects negotiated separately across a number of countries and jurisdictions.
“While it’s also possible to have the anticorruption commission in each country take responsibility, most of the belt and road countries have limited capacity, experience and political will to take on this role,” Wrage says.
Reflecting the multifaceted nature of the trade initiative, a King & Wood Mallesons’ report from July 2017 highlighted corruption as a major concern. “Most countries along the belt and road are developing countries in economic transition. They are high-risk zones for compliance issues,” the report said. “According to the 2016 Corruption Perceptions Index published by Transparency International, many countries along the Belt and Road have low transparency in their government operations,” its authors added.
It is a view echoed by Wrage, who cites infrastructure works as being susceptible to corruption.
