Kuwait Saves Itself From Falling Into Guanxi Trap

Kuwaiti government seems to have understood the Chinese Guanxi trap which is synonymous with bribery and corruption in China.

But its latest move of excluding Chinese-sponsored Beijing Enterprises Water Group (BEWG) from Al-Mutla’s waste water purification plant shows that the country is rectifying its past mistakes.
According to Financial Post, Guanxi is a system of mutually beneficial relationships that works as a lubricant for the wheels of the business transaction and is often synonymous with bribery and corruption in China.

Recently, Kuwait’s Ministry of Public Works disqualified the BEWG’s tender for setting up a wastewater treatment plant for Al-Mutla’s sewage station. Kuwaiti Public Works administration said that the reason behind the disqualification of BEWG’s bid was based on the ground that it was earlier involved in bribing the officials to secure the Umm Al Hayman project.

After this revelation, Kuwait’s crown prince Sheikh Al-Ahmed has directed investigative agencies to nab those involved in maladministration and misdeeds, reported Financial Post.

Financial Post reported citing the ministry of Public Works’ report that the Chinese companies are indulging in malpractices for gaining an advantage to win contracts in Kuwait.

China-sponsored companies participating in Belt and Road Initiative (BRI) projects are another manifestation of Beijing’s malafide intentions. There are widespread instances of bribery with a reported 60-85 percent of Chinese firms paying bribes to secure projects under BRI. Chinese firms are known offenders of peddling influence.

Apart from payments to lower-level bureaucrats, there have also been several notable scandals involving senior political figures receiving illegal gratification from Chinese companies, reported Financial Post.

Chinese companies are the least transparent as per Financial Post citing Transparency International’s study in 2019 based on 100 firms in 15 emerging markets. Poor business practices including delays in the completion of projects are endemic to BRI projects. Numerous Chinese firms have been debarred from World Bank and multilateral development banks for fraud and corruption including inflating costs to give bribes.

Kuwait is not the line example. In Malaysia and Kenya also the Chinese government used its Guanxi trap to gain advantages in the contracts.

Former Malaysian Prime Minister Najib Razak’s ouster in May 2018 was linked to Chinese projects under BRI. China poured out the money into Malaysia’s state development fund 1 Malaysia Berhad, known as 1MDB, by inflating the cost of infrastructure projects, Financial Post reported citing Wall Street Journal.

In exchange, China received the freedom of access to major national rail and port projects in Malaysia. Whereas in Kenya, the prosecution of Chinese officials on corruption charges showed that to bypass the systemic procedure, China employed illegitimate tactics. Kenya is facing unimaginable debt resulting from a railway project that has exceeded its budget and yielded unexpectedly low results.

These case studies corroborate the widely held beliefs that China exploits countries to provide impetus to its BRI projects. To build infrastructure projects in other countries, the interested party naturally needs to go through sets of official procedures of the recipient country. However, to bypass these procedures, China indulges in corrupt practices and executes projects abroad through unsavory means, according to Financial Post. (ANI)

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