LAUSR

Since 1974, Hong Kong has gone from being pervasively corrupt to being the best example of effective anti-corruption programs and, most recently, to experiencing widespread concerns about collusion and corruption convictions at the top levels of the government. I examine these transformations, focusing on the role of informal processes operating within government and how policies may have consequences that are very different from those that were intended. The colonial government believed that the problem of corruption resulted from the discretion of junior officials, and anti-corruption efforts during the colonial period focused on reducing this discretion and, more broadly, on changing the “rules of the game.” A case study of boat squatters in the 1960s reveals this worldview, the operation of corruption rackets, and efforts to reduce these problems through setting clear procedures. Yet formal procedures can reduce the risks involved in profiting from public office in ways that are often seen by the public as illicit even when they are formally legal. Precise formalization of what counts as corrupt allows opportunistic rent-seekers to skirt closely to the limits of legality while remaining safely on the legal side. Sharp boundaries between corrupt and noncorrupt offer great possibilities for gaming the system. Even when legal, collusion can be as damaging as or worse than corruption.