China and the “web of patronage”

Via Domainfax:

A former Fairfax Media editor being sued for defamation by Chinese-Australian billionaire Chau Chak Wing has told the Federal Court he feared being drawn into a “reciprocity trap” or “web of patronage” after the property developer lavished him with expensive gifts.

Garnaut flew with an assistant to China and was met “on the air bridge” by the property developer’s personal assistant and whisked away in a “waiting black Bentley”.

“I didn’t realise he’d meet us at the door of the aeroplane,” Garnaut said.

Garnaut said they had turned down Mr Chau’s offer, via his assistant, to cover their accommodation and flights and “we were very clear about not taking any hospitality or benefits which were not logistically necessary to do the job”.

He said that Mr Chau “looked at me I thought with a little bit of a twinkle in his eye” at the start of the interview and suggested he come work for him as a journalist.

He said the pair laughed when Mr Chau said he could write “anything you want”. Mr Chau gave evidence on Tuesday that this was a joke rather than a genuine job offer.

More at The Australian:

“He knew a lot about me, including my zodiac sign,” Garnaut said.

“I was a tiger and he was a horse,” Garnaut added.

…The day ended with showbags, one for Garnaut, one for his assistant, with — all up — six bottles of Chateau Latour, the 1986 and 1994 vintages, and some of Bordeaux’s best stuff.

“I thought this was a major problem,” said Garnaut.

“I thought he was trying to bring me into his web of patronage.”

The half dozen were later sold at auction for $7000 with the proceeds given to charity.

Are you reading, Junket Jen Hewitt? I guess not, because fresh from her latest free trips to Asia supported by Andrew Forrest, she’s up in arms over the blocking of Huawei:

The Turnbull government is preparing for another showdown with China if it proceeds to block Huawei from any involvement in the 5G mobile network.

With Australia’s security agencies believed to strongly back the ejection of the Chinese telecommunications giant in lockstep with the Americans, a confrontation now seems likely.

This has echoes of the Abbott government’s decision to block Huawei from involvement in the national broadband network – ironically against the wishes of then communications minister Malcolm Turnbull.

But since then, the Australian-Chinese relationship has become more fraught and China’s willingness to take more aggressive retaliatory action more obvious as well as more high-risk for Australian businesses.

And? Pay back your airfares, meal tickets and hotel rooms then we’ll listen.

Then there’s the APA gas pipeline bid, from the AFR:

As we understand it, CKI has spent a good deal of time introducing both FIRB and the ACCC to its intentions and the proposal it delivered to the APA chairman a week ago arrived with assurances that preliminary contact had been made and that a deal could be done.

So how might CKI have secured that comfort zone? On that we are not privy. But I can tell you what I would do to sate any concerns within government or its regulatory agencies.

The first thing I would do is offer to deliver my unregulated pipelines into regulated oversight of the ACCC. The second thing CKI should do is spell out to governments and regulators that CKI’s cost of capital is materially lower than is APA’s and that its expectations for investment returns are maybe 200 basis points lower than its target’s. In other words, it will accept, and can live very comfortably, with lower returns from the network.

Good luck figuring out Li-Ka Shing’s relationship with the Chinese Communist Party.

At The Australian there’s more on the Pacific:

Solomon Islands Prime Minister Rick Houenipwela says some Pacific Islands nations are under pressure to sever ties with Taiwan in order to establish diplomatic relations with China.

The comments were made on Mr Houenipwela’s visit to Canberra to sign an initial agreement for an undersea internet cable between Australian, Papua New Guinea and the Solomon Islands.

There is a dwindling list of countries which trade with China but maintain diplomatic ties with Taiwan, and in recent months some countries have moved to cut their links to Taipei and adopt a “one-China” policy.

That bribery battle has been raging for decades. Taiwan plays it as much as China does.

And finally, there’s more progress on foreign interference laws:

…amendments include largely exempting private multinational companies, media organisations, NGOs and universities from having to register and limiting the requirement to register to an agent directly acting on behalf of a “foreign principal”, defined as a foreign government, political organisation, government-related entity or individual.

In what intelligence sources describe as a “China clause” to capture state-owned enterprises, a company that is 15 per cent owned by a foreign power or has 20 per cent of directors with links to foreign governments would be required to register.

If the government believes a company or employee’s links are not public, the Attorney-General’s Department can issue a transparency notice requiring them to register, which can be challenged in the Administrative Appeals Tribunal. That could ensnare companies like telco giant Huawei or the Port of Darwin’s owner Landbridge, which are both private Chinese companies but have Communist Party links.

The power of nomination by the Secretary is unavoidably draconian but what choice is there given the above?

First up, Andrew Robb.


  1. HadronCollision

    It’d be good if taxpayers could refer suspected agents to the register
    “Geez Louise, have you seen the referral inbox this morning? 1000 referrals for Andrew Robb?”

  2. “I was a tiger and he was a horse,” Garnaut added.

    Confucius say: ‘Horse who lick tiger’s arse want more than taste of tiger shit”

  3. GunnamattaMEMBER

    This is NOT just an issue for the Federal Government.

    There are a number of very very senior Public Servants (AS, FAS. DepSec and above) who are believed to have raised issues/asked questions about propriety if gift acceptance in the face of exceptionally pushy gift givers.

    A recent survey from within Attorney Generals has indicated it is a very serious issue too for the University sector and State and even local government. One circumstance involving a regional Victorian city council has revealed that all but two elected council members and all but one executive level of a council had received gifts with a value of more than $3000. Another regional utility in southern NSW has had a similar phenomena unveiled with it. An incidence with a QLD state department saw two high level purchasing approval delegates resign shortly after being questioned about decisions they had approved.

    It isnt just gifts, it is services in kind, airfares (including for family and friends) & holidays,

    • Kickbacks need not be cash, good way of doing it is paying for holidays, fuel cards etc.
      I worked for one teir one EPC a few years ago and the following happened.
      The procurement manager went on a 3-4 week overseas holiday with the wife and the kids to either Europe or the USA.
      My boss once commented to me that he earns more than the procurement manager and I can’t afford that sort of yearly holiday for 5 people.
      He drove a BMW worth over $100K.
      He gave a story his wife had a big corporate job, paying more than his $200K salary.
      I later found out the wife’s corporate job was a mobile dog wash business.
      I he was always going out for lunch fridays with preferred suppliers,
      On one tender, tried to get a Chinese supplier considered as his pricing was really good.
      No No No!! the procurement manager said, along with one or two racist comments, if heard by others would have caused a storm and instant dismissal.
      He was dead set on using his “preferred suppliers”
      Anyway, eventually the Chinese supplier came out here to visit, and visited my office.
      Management attended, and the procurement manager had to attend.
      Before I knew it, procurement manager was accpeting dinner at a expensive Chinese resturant in Sydney, king crab on the menu.
      Then he’s travelling to China, to visit the supplier.
      A order is then placed.
      Next annual leave holiday, the procurement manager is travelling to China for his holidays with the wife and kids, 5 people!
      Never economy, if pissed after a Friday lunch he’d sometimes let things slip through boasts.
      This guy is now working for the NSW government!
      There seems to be a problem here in Australia corruption, politics is just the litmus test

    • I’ve spent a fair bit of time in former Soviet countries. The biggest difference from what I’ve seen is not corruption is endemic in both places, but in places like Russia it is endemic throughout all levels of public service. And it doesn’t have to be cash payments. One time I was a day late with registration, my friend said don’t worry about it. Apparently all sorted with a bottle of cognac. Another friend involved with imports to Kazakhstan told me it’s not a matter of if you have to pay off customs officials to get goods through, it’s matter of how much. Another told me about having to provide “gifts” to teachers to get good grades/exam results.

      It would not surprise me if unscrupulous foreign actors have provided gratuity to (senior) public servants with the expectations of certain favours. No cash needs to be involved, only “gifts”. Bribes can be a barter economy. I doubt Australia has succumbed to the depths of depravity in some former Soviet countries (yet), but it would be naive to think some public servants aren’t receiving “fringe benefits”.

      Small gifts are also psychologically effective, small things can have a big influence.

  4. Chau’s case looks vexatious and vain. Hopefully he will lose and have large costs to pay. Even if the politicians bend over for any Chinese billionaire, the judiciary can uphold its independence.

  5. Think I’ll replace my Huawei modem with something made outside China by a non-Chinese company. Hopefully South Korea or the US still make these things.

    • I read recently that Google, Micro$oft and Apple all are queuing up to make a replacement models that promise not to compile and sell your data. A promise is a promise!

    • surfbeach2536

      This morning I spoke with a different Chinese modem manufacturers help desk and was asked to provide my phone number before I got help with my issue, thirty minutes after I had hung up with the help desk I received a recorded telephone call saying in English that the call was coming from the Chinese Embassy in Canberra and then gave an unknown message in what i think was Mandarin. Coincidence?

      • Scam – the problem with the Chinese modems is not that you will specifically be hacked by Chinese security services. It is that the Chinese security services stole the know how from the US, which they gave to their manufacturers, and so they have little idea of how to actually use it, and will leave security loopholes throughout (sometimes greed, mostly incompetence).

        Someone has probably hacked all those models, and put in a tracer of some description in them. Pretty simple to do, esp if you paid off the engineer at the manufacturer to leave a security hole there by mistake on purpose.

        Step 1, factory reset the modem, and then get the latest drivers from the manufacturer. With luck, the most glaring security loopholes will be fixed.

        That being said, they are probably trying to rip off some Chinese speaker by demanding something, hence the official-ness of the message, so realistically unless you have a wechat account, they are unlikely to be able to rip you off.

  6. All these gifts are pure generosity from common folk who’ve made good with honest, hard work, and are just looking to help others. Gifts from the heart, and you all disparage them. You sicken me.

  7. I know this sounds weird to Aussie ears, but it is not always a bribe, not even an attempt to bribe but rather just their way of sharing. There are many prominent Chinese businessmen who honestly believe that they can’t operate at their most effective point unless they share their wealth. As I said seems strange maybe even unbelievable but trust me I’ve received (an family members even more so) more than my share of generous gifts and wondered what’s up with this, what do they want? only to realize that nothing is up with it, it was simply the way that these guys liked to live their life. Maybe they believe they can buy friendship but I honestly don’t think this is the case, it’s more a case of them having more money than they have any idea what to do with and figuring that their generosity in this life might be rewarded in some future life (remember most Chinese are sort of Buddhists well not really Buddhists but of the major religions Buddhism is probably the closest to what they believe) . So a lot of very wealthy Chinese just have a sort of Pay-it-forward mentality
    Yeah, I know you’all believe that my opinion is bought and paid for but maybe you’re all wrong on that score as well.