The Supreme People’s Court and other Chinese government institutions have been making increasing use of name & shame lists to call attention to illegal behavior by institutions and individuals and to prevent them from benefiting from their illegal behavior (as I discussed in this blogpost). International institutions, such as the World Bank, Asian Development Bank, African Development Bank, Inter-American Development Bank and the European Bank for Reconstruction and Development, name and shame as well.  They list firms and individuals that have been disbarred (by their own or counterpart institution) from being awarded a multilateral development bank contract because they have been sanctioned for fraud or corruption violations (the World Bank list is here and a comprehensive introduction is found here). The World Bank cooperates with other international and national regulatory and enforcement organizations, such as the European Anti-Fraud Office and the UK’s Serious Fraud Office.

I recently published a brief blogpost on the website of the Wong MNC Center, calling attention to the significant number of Chinese companies, particularly state-owned companies, that are on the World Bank (and other multilateral development banks) blacklists. I noted that there do not seem to be clear repercussions for those companies and queried whether China’s Asian Infrastructure Investment Bank (AIIB) will follow the practice of the other multilateral development banks.AIIB has recently appointed Mr. Hamid Sharif, formerly of the Asian Development Bank, to be Director General of the AIIB’s Compliance, Effectiveness and Integrity Unit, and Gerard Sanders to be its general counsel. Sanders worked for many years in the legal department of the European Bank for Reconstruction and Development. Both men would take the disbarment system as an accepted part of the international development bank regulatory system.  Some issues I didn’t have a chance to raise:

• A significant number of Chinese companies did not participate in the sanctioning proceedings or make use of the appeal procedures. This attitude is analogous to the way some  Chinese companies view foreign arbitration and other foreign dispute resolution (the three nos–see my earlier blogpost on this).An experienced Chinese consultant that I contacted privately remarked that Chinese firms take the “Four No” approach—do not recognize, do not accept, do not commit themselves, and there are no consequences in China;
• Some of the Chinese companies that have been or are currently being disbarred are party to major contracts (or memoranda of understanding) under various Chinese government initiatives.  According to a recent report in the Philippine press, China Road & Bridge and affiliated companies (blacklisted by the World Bank until 2017) are among the major beneficiaries of President Duterte’s recent trip to China.  Other blacklisted companies are doing projects in Africa and Central America.
• Officials of the Supreme People’s Procuratorate, as seen in this 2014 article, are advocating better international cooperation with anticorruption efforts in the business sector and mention the international development bank blacklists as a given part of the international anticorruption landscape.  They reveal that there are major compliance issues among Chinese SOEs operating abroad, with bribery as one of many problems and a generally prevailing indifferent attitude towards legal compliance.
• It appears there will eventually be a better integration of the multilateral development bank blacklists with the Chinese system, but this will take time and many hours of quiet advocacy to put in place. It would be unfortunate if these efforts are accelerated because disbarment of Chinese companies under the World Bank system results in further investigations or sanctions in Europe, United Kingdom, or elsewhere in the world.