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Government transparency is the best policy
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Shanghai has drawn a lot of eyeballs lately for its proposal to restrict public servants from going into business after leaving office.

The news came just days before last week's Fourth Plenary Session of the 17th Central Committee of the Communist Party of China, where anti-corruption was high on the agenda.

The Shanghai regulation is not the first of its kind in the nation. The central government and various local governments have notified similar rules repeatedly over the years. So whether it is going to carry some real meaning this time or become yet another toothless regulation is truly debatable.

The Shanghai edict stipulates that public servants of the rank of deputy section head and above should not join businesses in fields related to their previous posts or engage in activities that would be in conflict with public interest.

The operational words are clear: Quite a few public servants, many holding senior positions, have resigned or retired from government to work at high-paying jobs in corporations, often in the fields they are familiar with. Some even sit on the board and become shareholders shortly after joining the company.

There is of course no free lunch. Oftentimes it is payback for these officials, who had granted favors to the companies while they were in office. These former officials, who still wield huge clout and who are experts at maneuvering government guanxi, are valuable assets for businesses, by acting as an agent between government and business, and trading money for power. That is why resigned and retired government officials are in demand.

The Shanghai regulation is quite random in the sense that it governs only officials above the deputy section head level. Though it is often true that the higher the rank, the more powerful the officials, it does not necessarily mean that low-ranking officials are less skilled at navigating government guanxi system and abusing power.

The other concern is why officials are banned for only three years, since it is hardly convincing that the officials' clout and guanxi will vanish in just three years.

The Shanghai regulation also seems to ban resigned or retired officials from joining only private businesses, not State-owned enterprises, though SOEs covet the officials' guanxi network just as much as private businesses.

It is often the case in cities like Shanghai that local government would reward a senior public servant for his service by giving him a nominal position in a large SOE. And that nominal job usually pays 10 or even 30 times more than a senior government official's salary.

This kind of job, which is no less immoral than those held by former officials in private businesses, is unfortunately not on the banned list of the Shanghai regulation.

All these show that banning resigned and retired officials from joining companies, either private or SOE, won't be an effective way to uproot corruption and rent-seeking opportunities.

A more effective system is simply to make government operations transparent so that there won't be any rent-seeking opportunities left for officials, whether incumbent, resigned or retired.

Only then will those crooked public servants lose their appeal to corporations.

(China Daily September 22, 2009)

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