The Art of Bribery

by on July 6, 2011 at 6:38 am in Economics, The Arts | Permalink

Interesting piece on bribery in China. The following four scenarios all have counterparts elsewhere but, as relayed by the author, in China the elegance of the art and the elegance of the bribe are all brought together with true appreciation.

The First Scenario:

The corrupted official can sell a fake painting at any rigged gallery. After coordinating with the official, the briber will go to the designated gallery and buy it at the agreed price plus the commission of the gallery owner. All of the three parties know that the painting is fake, but eventually they are all benefited. This fake painting can be reused and it can go through another bribery circulation of other “elegant” buyers and sellers.

The Second Scenario:

The briber puts a real and expensive painting at the gallery. The gallery marks down the price as if it were a fake painting. The official buys it as if he has the greatest bargain on earth. Sooner or later, the official can resell it at the right place, at the right time, and at the right price.

The Third Scenario:

The briber visits the official and gives him/her a real or fake painting as a present. Three days later, a seemingly unrelated person knocks the door of the official and buys that particular painting at an unreasonably high price. This buyer is actually a trusted subordinate of the briber, and, by doing so, the whole process does not involve the gallery whose owner will certainly ask for a commission.

The Fourth Scenario:

There are rigged auction houses all over China and they become the most suitable places for elegant corruption. The briber, first of all, gets a fake painting either from a gallery or a fake painting factory. Then, s/he provides relevant document proof of scholars and experts to take care of the problem of authenticity. These scholars and experts are paid to confirm the authenticity of this fake painting. They falsify every historical detail, evidence of painting style and scientific verification of the materials used. The forged painting is then given to the official as a gift and is auctioned at a very high price. Eventually, there is always someone coming from nowhere who wins the bid. Again, the bidder is a trusted person of the briber. These auction houses get hush money before the whole corruption process is completed.

Hat tip: Daniel Lippman.

Alan Gunn July 6, 2011 at 8:02 am

Here, we just get a crooked commodities broker to enter buy and sell orders at the same time, then fill in the blank on the winning order with the governor’s wife’s name and that on the losing one with the food producer’s. Then when the governor’s wife has made $100,000, she gives up trading. She ought to be careful not to say she learned all about trading by reading a paper that didn’t cover it at the time, though.

Bill July 6, 2011 at 8:15 am

The briber forms a PAC or is an aggregator and has meaningful and deep discussions with the Senator about some tax legislation and some special exemptions or deductions.

Andrew' July 6, 2011 at 9:49 am

Apparently, you haven’t heard. Those are now “tax expenditures” and will done away with tout de suite.

Bill July 6, 2011 at 4:51 pm

Yeah, like the cotton and ethanol subsidies in red states.

bbartlog July 6, 2011 at 8:30 am

I wonder to what extent the Chinese are able to keep track of truly authentic art (or truly authentic other items) versus those which have been merely ‘authenticated’ by paying off experts/authenticators. Obviously, in a case like scenario #4, some set of people are aware that all of the impressive credentials attached to the art are actually fake. Is this a very small set of people, so that the painting could actually plausibly be resold as real? Or a much larger number? In the second case, I would have to think that there is a market for authentic authentication as opposed to the paper authentication used to conceal the bribe. There are other examples of this (anecdotally at least), e.g. you can apparently buy falsely certified ‘organic’ food commodities in China as well as actual organic ones, and the sellers are not even really trying to fool the buyer so much as give them a paper trail if they want to dupe the final consumer of the product. It will be interesting to see also whether a similar situation develops with scientific papers… it is well known that a lot of Chinese research is fabricated crap, but there is also a lot of high quality work being done, and I would have to think that there must be some unspoken system they have to keep track of which category a particular publication probably belongs in.

yes July 6, 2011 at 9:37 am

Spotting a huge run-up in art price used to be an indicator that an economy was heading into bubble-territory, now a run-up in art prices can be used as an indicator that bribe rise/fall in a given economy. Funny how economic indicators lose their significance in a different cultural context.

also July 6, 2011 at 9:40 am

Isn’t the art market a good place to look for instances of signalling vs skill? Has anybody done studies on how much the value of a piece of art rises once a well-respected figure approves of it? I would hazard a guess that many people investing in art rely on others’ opinion rather than their own when valuing art.

Andrew' July 6, 2011 at 10:24 am

So old-fashioned to use hand-painting and auction houses. In the US we use the printing press and banking system.

xysmith July 6, 2011 at 11:14 pm

Nah. We just have them write a book. Ghost-writer to do the work and an advance against royalties for the cash.

anonymous July 6, 2011 at 4:16 pm

How much of the massive post-WWII run-up in prices of (genuine) European art can be attributed to a similar phenomenon, worldwide?

Not bribery so much as a genteel form of money laundering. Wealth is always easier to explain when it comes from owning or selling paintings or other baubles that have appreciated in value, rather than awkward suitcases full of cash.

Bill July 6, 2011 at 4:53 pm

Maybe an interest free purchase of a gold item at Tiffany’s which you can resell a year later at a higher price?

Tom V. July 6, 2011 at 5:38 pm

When I was still in college as a business student, I spent a semester studying in Hong Kong. I couldn’t believe it, but one of my courses actually instructed the class on effective bribery techniques. It was one of the most interesting and outrageous courses I ever had.

Douglas Knight July 6, 2011 at 7:03 pm

So that’s why late Picassos are suddenly as as expensive as early ones.

mjw149 July 6, 2011 at 10:12 pm

The US should no longer feel inferior to the Chinese in bribery. Pieces of art? It can’t compare to our NCAA, where student athletes learn valuable business skills for life, involving cars, points shaving and cheerleaders. And that’s just our students. They should learn from our masters, like Romney’s Utah Olympics or the US Chamber of Commerce.

JohnXiao July 7, 2011 at 4:31 am

There is a very famous and expensive restaurant chain in China that is famous for this. At the end of the dinner you and your guest receive small gifts from the restaurant (a cuddly teddy bear or something like this). Some time later your guest returns the gift for cash, and it turns out that this seemingly worthless gift has a very high cash-in value. Of course the bill for the dinner turns out to be remarkably high.

By the way i have to laugh at the earnestness of all these very naive Americans who think that corruption in the US even comes close to that of China. I suppose it makes them feel important and delightfully indignant to say that it is, but if you have actually lived abroad you will notice the difference.

PrometheeFeu July 7, 2011 at 12:32 pm

It is common for people to claim that bribery is just as common in developed countries but that it just happens at a higher level. For that to be true, you have to assume that countries such as China are less corrupt at the higher levels of government. I have my doubts on that matter.

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