Pre-analysis plan for the impact of the introduction of leniency on bribery prosecutions in China

2015-08-01

2015-11-30

Relative incidence of harassment bribes in the total. Looking at the prosecution documents we can first of all form a better idea of whether the presence of improper benefit is actually considered in practice, and so whether harassment bribes are effectively set apart and subject to a different discipline (in particular, the exemption from punishment for the giver). Further, if this is the case, we can observe whether the 1997 reform led to a change in this respect, and hence on the frequency of harassment bribes relative to other types of bribery among the cases detected.

Relative incidence of report by the bribe-giver. Ideally we would want to know whether the case was initiated by a spontaneous report, at least for harassment bribes: after the introduction of asymmetric punishment, we should in general expect a higher frequency of cases in which the (no longer guilty) bribe-givers come forth and report the crime to the authorities. For the other class of bribes, the introduction of leniency can have an ambiguous effect. Among other things this will depend on the severity of sanctions and the actual likelihood of obtaining leniency. Unfortunately the information on how the case was initiated is not available in the case files. There is however some indication of whether the defendant volunteered information if leniency was awarded.

Size of the bribe, size of the return, income or status of the bribe-giver (and the bribe-taker) If the reform, through the introduction of leniency and asymmetric punishment, makes detection easier because of the incentives provided to the bribe-giver, this amounts to an increase in the expected fine for the bribe-taker (even though the actual sanctions decrease). We expect this to lead to an increase of bribe size for distortionary bribes: the threshold to undertake corrupt behavior is now raised, hence individuals will only exchange bribes if the returns from this corrupt agreement are higher. The picture is different though for harassment bribes, when the bribe-giver is not expected to give back the gain. In this case incentives to report increase with the size of the bribe, so the larger bribes will be deterred to a larger extent.

We select a sample of prosecution case files to be read and analyzed in detail. The total number is determined by a power calculation. A Chinese law student that we hired for the purpose will access all the documents related to the cases in the Procuratorates' archives, read through them and extract for us information about the outcomes that we specified.

Randomization done in office by a computer.

Prosecution case.

No

300-2000 cases depending on cost.

300-2000 cases depending on cost.

50% cases pre-reform, 50% cases post-reform.

Power calculations in attached analysis plan.

Leniency policies and asymmetric punishment are regarded as potentially powerful anti- corruption tools, also in the light of their success in busting price-fixing cartels. It has been argued, however, that the introduction of these policies in China in 1997 has not helped fighting corruption. Following up on this view, the Central Committee of the Chinese Com- munist Party passed, in November 2015, a reform introducing heavier penalties, but also restrictions to leniency. Properly designing and correctly evaluating these policies is diffi- cult. Corruption is only observed if detected, and an increase in convictions is consistent with both reduced deterrence or improved detection. We map the evolution of the Chinese anti-corruption legislation, collect data on corruption cases for the period 1986-2010, and apply a new method to identify deterrence effects from changes in detected cases devel- oped for cartels by Miller (2009). We document a large and stable fall in corruption cases starting immediately after the 1997 reform, consistent with a negative effect of the reform on corruption detection, but under specific assumptions also with increased deterrence. To resolve this ambiguity, we collect and analyze a random sample of case files from corruption trials. Results point to a negative effect of the 1997 reform, linked to the increased leniency also for bribe-takers cooperating after being denounced. This likely enhanced their ability to retaliate against reporting bribe-givers – chilling detection through whistleblowing – as predicted by theories on how these programs should (not) be designed.

Berlin, Maria, Bei Qin, and Giancarlo Spagnolo. "Leniency, asymmetric punishment and corruption: Evidence from China." (2017).

https://swopec.hhs.se/hasite/papers/hasite0034.pdf