‘America First’ and the potential implications for Hong Kong and the wider world
The inauguration of Donald Trump as the 45th president of the USA on 20th January 2017 marked a new era in global, as well as US, politics. The flurry of executive orders signed by President Trump in his first few weeks in office have confirmed that his presidency is likely to be marked by a sharp and controversial change in direction for the USA with a promised reversal of many of the policies and laws introduced by the Obama administration.
Whilst large sections of the international community have condemned his approach towards women and migrants, business both in the USA and the wider world is looking ahead to what impact the ‘America First’ prioritisation will have on global markets. The USA has been at the forefront of tackling corruption over the last 40 years, with, more recently, the two term Obama administration extending the anti-bribery principles of the Foreign Corrupt Practices Act to all OECD members and later all G20 countries. The same Act has been dismissed by the new President as a “horrible law” that hampers the USA’s ability to compete in global markets.
In recent years regulatory compliance and efforts to tackle corruption and money laundering have been at the top of the agenda for the authorities in Hong Kong. Widespread corruption in the 1960s and 70s was recognised as being detrimental to Hong Kong’s ability to compete on the international stage and hugely successful efforts were made to clean up the public sector with the creation of the Independent Commission Against Corruption in 1974. After years of being tarnished with negative reports on corruption in the business world Hong Kong business has taken positive steps to demonstrate that professionalism and integrity can be synonymous with success both at home and abroad. The ICAC has been widely viewed as a model to be emulated for anti-graft agencies around the world and was credited with ensuring Hong Kong’s emergence as a global financial hub.
The last year has, however, seen a worrying period of instability within the ICAC. The head of operations was removed in the middle of an investigation into Chief Executive Leung Chun-ying, and uncertainty continued over the future and leadership of the ICAC. Frequent attacks from politicians and misappropriation charges against pro-democracy lawmaker Leung Kwok-hung raised concerns that the ICAC was beginning to buckle under political pressure both internally and externally from China.
The year ended, however, with some recovery of public confidence as twenty nine current and former staff from five financial institutions were arrested for alleged bribery and the former leader Donald Tsang’s high profile corruption trial began. Mr Tsang has now been found guilty of one count of misconduct in public office relating to the period of his term whilst the City’s leader, making him the first ever Chief Executive to be convicted in a criminal trial
President Trump’s concentration on US business interests first (and possibly exclusively) and his complex relationship with China mean 2017 is likely to be a fragile time for Hong Kong’s markets and the ICAC’s continued efforts to tackle corruption. If the USA pulls back from enforcing anti-corruption laws there is real concern that the strong enforcement relationships forged with Hong Kong and other nations could deteriorate. As a global superpower the USA must lead by example if global efforts to stamp out corruption are to thrive. Effective anti-corruption measures require not only politically independent bodies investigating but also a public perception and confidence that measures are being taken. The new President’s alleged history of business with, and his apparent current courting of, countries with reputations for corruption, such as Russia, threatens the global efforts to stamp out corruption which are fragile at the best of times.
This may be the year that smaller jurisdictions take a more proactive stance on corruption on the world stage to prevent any unravelling caused by the Trump rhetoric. Markets, such as Hong Kong, which have previously had their reputations tarnished by corruption but have made major strides over the last forty years to stamp it out are likely to find themselves at the forefront of the global fight against corruption. If the ICAC and law makers can resist the political pressures from China and Washington Hong Kong may be able to make its mark as a world leader in tackling corruption. Whether the ICAC is up to the job is a matter that the global markets will be watching closely.