China to blacklist health care companies involved in bribery

China's decision to publish a blacklist of health care companies that have been involved in paying of bribes is a positive initiative. What is most commendable is that they will publish the blacklist, which is something even the EU has shied away from since its 2004 Directive - Kudos for that. 

Blacklisting is in my view the most effective mechanism to combat corruption in public procurement, especially in emerging markets and developing countries as it is cheaper to implement and more deterrent in impact. Blacklisting establishes a case whereby acts of corruption are no longer commercially viable as once blacklisted for a definitive period of time the commercial organisation loses access to that particular market thereby forgoing the opportunities it provides. While one sees an increase in financial penalties for bribery actions, these penalties are in cases of minor offences and sufficient compliance window dressing being incorporated as opportunity realization cost. Blacklisting on the other hand takes away the end result which is 'opportunity realization'.

My take on what China should and should not do:

1. As far as China's model goes what is unclear is whether they will consider pre-conviction blacklistings - which would set a very tough tone and would be most effective. 

2. Secondly, a comprehensive system of ensuring fairness and transparency in the process of blacklisting itself needs to be established in order to prevent abuse. It is imperative that though the blacklisting sanction will principally be an administrative action it embodies a sound quasi-judicial approach to prevent abuse.

3. Thirdly, the time frame of blacklisting should not be limited to just 2 years and should be extendable based on the seriousness of the matter. Further to be re-listing should be contingent upon incorporating concrete compliance measures to prevent bribery, the failure of which would extend the blacklisting (World Bank approach).

4. Lastly, a blacklisting sanction should not become a substitute for criminal prosecution. I would side with Immanuel Kant on this whereby the perpetrator of an offence must be punished for the sake of the law itself and to ensure that the law is not undermined.