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High profile scandals in China, India, and the Philippines: What's going on?

A series of high-profile corruption scandals across Asia have engulfed some of the region's fastest-growing economies, posing political challenges and clouding their investment outlook.

By Correspondent / March 28, 2011



Bangkok, Thailand

A series of corruption scandals in high places have engulfed some of Asia’s fastest-growing economies, posing political challenges and clouding their investment outlook. While complaints over government graft is nothing new, the latest revelations have raised public concern over the failure of political institutions to keep pace with economic development.

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In India, the ruling Congress Party-led coalition has been shaken over the past week by allegations that large bribes were paid to lawmakers to secure a crucial parliamentary vote in 2008. Last month China fired its Railway Ministry head and a senior engineer, amid allegations of widespread embezzlement in China’s high-speed rail program. The minister is the most senior to be disgraced in several years.

Meanwhile, the Philippines’ House of Representatives voted on Tuesday to impeach the country’s powerful ombudsman, Merceditas Gutierrez, who is accused of repeatedly stalling investigations into government corruption. Ms. Gutierrez faces an impeachment trial in the Senate after it returns from recess in early May.

Impact of corruption

Experts differ on the impact of corruption on economic growth, though most say that it creates market distortions and undermines effective regulation.

Some entrepreneurs in Asia describe it as the cost of doing business and point to the success of China and India in attracting foreign capital despite their mixed records on governance.

However, a string of high-profile corruption cases may have dulled India’s appeal to investors who have grown leery of such practices. In November a telecoms minister resigned over irregularities in the award of mobile-phone licenses and is currently under criminal investigation. An official audit put the potential cost to taxpayers at $39 billion.

Measuring corruption is an imprecise science. Transparency International, a Berlin-based watchdog, uses surveys to rank perceptions of corruption. In 2010 it rated China slightly better than India, with 3.5 out of a perfect score of 10 (India scored 3.3). The Philippines was rated as 2.4, compared with 9.3 for Singapore, which shared the top place with New Zealand and Denmark. Burma and Afghanistan received a dismal 1.4.

Corruption exacerbates disparities within countries, as the poor must pay more for public services, while those in government reap the benefits, says Anupama Jha, director of Transparency International-India in New Delhi. “Ultimately it is the poor who suffer,” she says. She cited a 2008 survey that estimated that low-income Indians paid $200 million a year in bribes to public officials.

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