7 - Corruption: arm's-length relationships and markets

Summary

Introduction

On 8 May 1993 The Washington Post carried a front-page story about a division of the US National Institute of Health in Bethesda ‘in which some female employees were promised promotions and raises if they agreed to have sex with their male managers …’ (Jennings, 1993, p. 1). On the same day, an article in The New York Times reported that in China, in the process of privatisation of land, ‘individuals seem to be expropriating the state's property at bargain prices.’ (Dunn, 1993, p. 3). The article goes on to state that ‘… today's real estate boom raises troubling questions about land that is allocated not [so much] by prices but by guanxi. The deals … say less about market economics than about simple corruption’ (ibid.). Guanxi is the Chinese word for ‘connections’. The article cites a Chinese businessman to the effect that: ‘if you have guanxi, it is the time to make big money.’ Thus, according to this article, in today's China, ‘connections’ have great economic value and smart people can capitalise on them to earn large ‘incomes’. On 8 May 1993 French newspapers were still carrying stories about the suicide of former Prime Minister Pierre Beregovoy, attributed in part to the accusation that he had received an interest-free loan from a friend. And Italian newspapers were providing further details about private entrepreneurs who had paid large bribes to well-placed politicians in order to get lucrative contracts with the Italian public sector.