A Tale of Two Chinese Cities

Once upon a time (in 2010) a wealthy Chinese businessman granted a long-term lease of a luxury apartment at an apparent undervalue to a senior Hong Kong government official, and then undertook multi-million dollar refurbishment works to it free of charge. At the same time, a corporation controlled by the businessman was seeking approval for the grant of a media licence application that was effectively in the gift of the senior official.

But why should Territorians care about that story? Well, the businessman is a chap named Bill Wong Cho-bau, based in Shenzhen. He is the founder and director of a number of companies including Donghai Airlines, which only last week began offering two Boeing 737 flights per week between Shenzhen and Darwin,  In return it is rumoured that Donghai is receiving a marketing subsidy from the Northern Territory Government of up to $10 million, although the Government won’t disclose the precise terms of the “partnering agreement” – they are said to be “commercial-in-confidence”.

The senior government official concerned is former Hong Kong Chief Executive (effectively the Governor) Donald Tsang. He was Last Governor Chris Patten‘s understudy before the UK handover of Hong Kong back to Chinese control in 1997, and later followed the first Chinese-born Hong Kong Chief Executive Tung Chee-hwa into the top job in 2005 on the latter’s retirement.

By 2010 Tsang was in his 70s and looking to retire himself. It appears he was quite keen on retiring to a three storey luxury apartment in Shenzhen offered to him by his little business mate Wong Cho-bau. Apart from controlling Donghai Airlines, Wong’s corporate interests include controlling a media company then named Wave Media which held an AM radio licence in Hong Kong but was bidding for a much more valuable digital radio licence, which he was later granted (two in 2010 and one in 2012).

Tsang was subsequently investigated by Hong Kong’s Independent Commission Against Corruption and later charged with crimes of official misconduct and bribery by the Hong Kong equivalent of the Director of Public Prosecutions. He was convicted on the misconduct charge and sentenced to 20 months imprisonment in February 2017. However, two successive juries have been unable to reach a verdict on the bribery charge against him and the DPP has recently announced (on 6 November 2017) that they are giving up and won’t charge him again. On 8 November 2017 the Northern Territory News published a story reporting that “CHINA’S Donghai Airlines has been in Darwin this week continuing talks with the Northern Territory Government about direct flights from Shenzhen to Darwin”.

Wong Cho-Bau (the alleged briber) has never faced any charges at all arising from his dealings with Donald Tsang.. He wasn’t an official so he couldn’t be charged with official misconduct. However you might ask why he has wasn’t charged with bribery as Tsang was? After all, in Chinese law (like that of Australia) bribery is a crime committed by both the briber and bribee. I don’t know the answer to that question but there are several possibilities:

1. To be found guilty of bribery the prosecution must prove the intention to bribe. Perhaps there wasn’t as much evidence of intention against Wong as against Tsang. The close timing between the lease and renovation of the Shenzhen apartment and the grant of media licences may have just been a coincidence
2. Perhaps the abortive prosecutions of Tsang made charging Wong too difficult.
3. Perhaps there were differences between the bribery law in Hong Kong and that in mainland China, that might  also have made prosecution too complicated. The handover arrangement between Britain and China provided for Hong Kong to be ruled with a degree of autonomy under a system called “one country, two systems”.
4. Perhaps Wong had greater influence with mainland Chinese authorities than Tsang had in Hong Kong (although that seems unlikely – the latter was Hong Kong’s Chief Executive).
5. Perhaps Wong was innocent.
6. There is also an active but inconclusive debate in China about the Chinese cultural practice of “guanxi” or gift-giving. Where does guanxi end and bribery begin?

While guanxi is obviously open to abuse, it is only corrupt if the activity performed as part of the relationship is illegal, for example, paying a bribe.

Leadership expert Steve Tappin says it’s simply part of the “social fabric” in China. “It’s very difficult to get things done without it,” he adds.

In fact most business leaders say it’s downright impossible.

“Right now in China, no matter how strong or how smart an entrepreneur is, as long as he does not belong to the business community, does not have a lot of friends who may help him, he’s not gonna win for long,” says Joe Baolin Zhou, chief executive of Bond Education Group, the largest private education service company in southern China.

Whatever the reason, Wong was never charged with anything. But it does make you wonder how much “due diligence” the Gunner Northern Territory Government did before entering a “partnering agreement” with Mr Wong’s company Donghai Airlines to fly into Darwin.  I am not in any sense suggesting that the Donghai partnering arrangement wasn’t a good idea (Darwin badly needs air links with China), nor that either party acted in any sense improperly, let alone committing bribery. But you would imagine that character and conduct in a broader sense would be relevant factors in a due diligence process for such a major matter from a Northern Territory viewpoint.