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On May 1, 2011, an amendment to China's Criminal Law took
effect after passage by the Standing Committee of China's
National People's Congress on February 25, 2011. The amendment
criminalizes for the first time the bribery of foreign government
officials and officials of public international organizations by
Chinese companies and individuals. The amendment to Article 164 of
the Criminal Law is modeled after Article 16 of the United Nations
Convention against Corruption, although there are differences in
wording.
Prohibition: The new law prohibits the act of
giving "money or property"
("财物") to any foreign government
official or official of a public international organization to
"obtain an improper commercial benefit"
("为谋取不正当商业利益").
The scope of the phrase "to obtain an improper commercial
benefit" under Article 164 appears to be as broad as similar
terms contained in Article 16.1 of the UN Convention ("to
obtain or retain business or other undue advantage in relation to
the conduct of international business") and the FCPA ("to
assist ... in obtaining business for or with, or directing business
to, any person"). Unlike the FCPA, however, the new Chinese
law applies only to officials of governments and public
international organizations and not to foreign political parties,
officials of such parties, or candidates for political office.
"Money and property" has previously been construed by the
Supreme People's Court in par. 7 of the Opinions on Some Issues
Concerning the Application of Law in the Handling of Commercial
Bribery Cases (2008) to include property-like interests with a
monetary value such as home decoration, membership cards with a
monetary value, debit cards, and travel expenses. It is likely that
entertainment expenses would also be included although this issue
was not specifically addressed by the Supreme People's
Court.
Penalties: When the amount paid is relatively
large, an offense is to be punished by imprisonment or detention
for up to three years. When the amount paid is very large, an
offense is to be punished by imprisonment from three to 10 years
plus a fine.
Corporate and Individual Liability: Personnel
in an entity (including, but not limited to, companies) who are in
charge of the offense or bear other direct responsibility are
subject to such penalties, and the entity itself is subject to a
fine.
Size of Payments that Constitute a Criminal
Offense: Although Article 164 does not specify the
thresholds for criminality, under the Regulations of the Supreme
People's Procuratorate on Criminal Investigation Standards
(1999), the criminality thresholds for taking a bribe and offering
a bribe are RMB5,000 (approximately $775 US dollars) and RMB10,000
(approximately $1,550 US dollars), respectively, and these
thresholds apply to Article 164. As such, payments of less than
RMB10,000 would not constitute a criminal offense.
Voluntary Disclosure: Article 164 provides for
leniency if the perpetrator voluntarily reports the violation
before an investigation has been initiated.
The definition and impact of specific terms awaits the issuance
of opinions by the Supreme People's Court and Supreme
People's Procuratorate. Nevertheless, according to Chinese law
professors like Prof. Cheng Baoku of Nankai University and Prof.
Ren Jianming of Tsinghua University, Article 164 should contribute
to the development of ethical practices in Chinese companies who
have been criticized for engaging in corrupt practices overseas,
particularly in developing countries. It should also help to level
the playing field in overseas markets between Chinese and foreign
companies, who have long been subject to similar laws. In these
respects it marks a change in longstanding Chinese positions based
on non-interference in the affairs of other countries, which among
other things, excused cooperation with corrupt regimes. Conversely,
the statute may also diminish any reluctance that Chinese
authorities may have had in the past to prosecute foreign parties
which have engaged in bribery of officials in China, as China has
generally not taken action in the past even after investigations by
other countries with respect to bribery in China have become
public. Both Chinese companies and foreign companies doing business
in China should be vigilant about corruption risks in their
operations worldwide.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Until recently, the primary risk that China’s culture of business corruption posed to multinationals was that they might run afoul of the FCPA or the UK Bribery Act.
In the three months since the Communist Party of China convened its 18th National Congress in November 2012, the CPC’s new leaders repeatedly have emphasized the important policy goal of combatting corruption.
Although China has long prohibited commercial bribery, as well as the bribery of Chinese state functionaries, a recent amendment to "the PRC Criminal Code" prohibiting bribes to foreign governmental officials and officials of international public organizations in exchange for illegitimate commercial benefits suggests that China’s enforcement initiatives soon may expand outside the country’s bounds to target misconduct perpetrated abroad.
The People's Republic of China has joined the growing number of nations to criminalize bribery of foreign officials through recent amendments to its Criminal Law, which took effect May 1, 2011.
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