U.S. scandals under scrutiny by world leaders

Posted: Thursday, October 24, 2002

CABO SAN LUCAS, Mexico -- Corruption in the Pacific Rim often conjures these images: Crooked cops in Mexico. Businessmen doling out bribes in South Korea. Midlevel Chinese cadres brokering back-room deals. Campaigners buying votes in Taiwan.

This year, add one more stereotype to the list: the indicted American businessman.

World leaders converging on this Mexican resort city this week for the Asia-Pacific Economic Cooperation summit are dealing with a new figure in global graft after a spate of U.S. corporate scandals, including accounting failures at Enron Corp. and WorldCom.

Already, delegates from the APEC's 21 members have called on one another to strengthen accounting laws and monitor corporate practices in light of high-profile scandals in the United States.

They have little choice -- scandal in the world's economic powerhouse has a devastating effect on the world economy. The latest scandals shattered investors' faith and sent global markets into a nose-dive.

The benchmark for Tokyo stocks, the biggest bourse in Asia, sank to 19-year lows largely because of the scandals.

Francisco Gutierrez, a Mexican member of APEC's business advisory council, said the private sector would be talking to government leaders this week about how to prevent corporate scandals. He called for more transparency and accountability in companies' annual reports and other statements.

For years, APEC has made battling corruption -- especially among customs officials -- one of its main missions, viewing graft as a crippling obstacle to free trade and foreign investment.

The battle has been an uphill one. With the exception of Singapore and New Zealand -- which have both long boasted clean reputations -- APEC has among its members some of the most corrupt nations in the world.

As the APEC meetings began this week, authorities in host country Mexico uncovered a network of corrupt officials who for several years sold classified information to drug cartels, helping gangsters escape police dragnets.

Vote-buying and graft are so common in Taiwan that a slang term was coined for corruption: ''black gold.''

For years, APEC leaders have promised to wipe out corruption, but their efforts have seen mixed results.

Until recently, travelers arriving at airports in the Philippines would slip a few dollars in their passports or give a bag of candy to customs inspectors. A major crackdown on airport corruption has ended that. But police officers there still routinely accept bribes for throwing out traffic tickets.

In China, where connections are still the key to business, the official media have made a point of highlighting corruption arrests.

The People's Daily reported Wednesday that the former chief justice of China's southern Guangdong province is being investigated on suspicion of accepting $1.4 million in bribes and using his influence to secure bank loans for his son's business.

But officials concede the problem will not go away anytime soon.

''Corruption has been a major problem facing all governments in the world since the first government was created in human history, and the Chinese government is no exception,'' Premier Zhu Rongji said this year.

Vietnam embarked on an ambitious crackdown on corruption late last year, starting with the capture of a mafia boss who reigned over an empire of prostitution and gambling in Ho Chi Minh City.

The dragnet later brought down dozens of police officers, government officials, prosecutors and journalists. Vietnam's largest criminal trial ever, with 156 defendants, is set for December.

Again this year, APEC delegates vow to do something about the problem. But analysts question how easily a diverse group like APEC can agree on anti-corruption measures.

Poverty, cultural acceptance of bribery and other social conditions are stumbling blocks in many member nations.

But even taking a stand on the international stage can be a major first step for some nations.

''Everyone knows corruption is bad,'' said Yutaka Akiyama, economics professor at Keio University in Tokyo. ''But it is meaningful that nations clearly express that common understanding.''

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