China Anti-bribery Laws
What are some of the methods for investigating and evidence collecting are used by Chinese Authorities?
Seizure of computers and computer records; seizure of bank records; seizure of corporate records; and seizure of telephone records and e-mails. Further, the authorities have extensive investigation powers that include the power to:
Detain or arrest the suspect;
Seal up, seize or freeze the suspect’s property;
Restrict the suspect’s movements or prohibit the suspect from travelling abroad.
What are the implications of International Anti-bribery Laws for Multinationals' Chinese Branches and Companies Listed Overseas?
The U.S. and other foreign companies in China are facing increasing anti-corruption scrutiny from both the United States and Chinese governments. Naturally, the increased scrutiny brings with it increased costs. Civil and criminal penalties can result as well for violations of China’s Anti-bribery law.
In relation to administrative proceedings, if a company offers bribes for the purpose of selling or purchasing goods or services, but the action has not triggered any criminal offence, under the Anti-Unfair Competition Law the State Administration for Industry and Commerce (SAIC) has the power to confiscate the illegal income from the bribery and impose a fine of between RMB10,000 and RMB200,000.
The sanctions for major criminal offences related to bribery and corruption vary depending on the offence and its severity, but generally involve criminal detention up to life imprisonment, confiscation of property and/or liability for a criminal fine. The Criminal Law does not specify the minimum or maximum amount of the fine for bribery cases; in practice it is left to the discretion of the judges and so varies from case to case.
With respect to a corruption offence not involving any public officials, the offender may be subject to fines and imprisonment for up to 10 years.
How do you run and localize your worldwide anti-bribery policy in China?
o Make sure that identifying and mitigating corruption risk is seen as a high priority - especially if you operate in a high-risk market, even though it represents a small proportion of your revenues.
o Gather proper information about high-risk markets - just look at what has come out about healthcare in China over the past ten days. There is a wealth of information in the public domain if you know where to look. Up-front investment in local knowledge is a worthwhile investment. The ways in which bribes are paid varies by market. Your risk assessment should try to capture this variety.
o Don't be tempted - if you know you will have to pay a bribe, it's not worth it. Find some other way. There usually is one. But assume some of your employees might be tempted - try to prevent it and make sure you check.
o Remember the danger of passive bribery - that your companies or employees may be the recipients of bribes, not simply paying bribes.
o It's not just about the Bribery Act. Remember local law and that enforcement action is being stepped up worldwide.
o Blow the whistle. If it's not a level playing field because your competitors pay bribes, tell the authorities in the UK, US or host country.
o Prepare for a model response if you are caught.
o Think about what second generation compliance might mean to your company – moving employees beyond box-ticking to a real anti-corruption culture.
o Try to be part of the solution not the problem. Position your company to be part of the fight against corruption – publicly supporting laws like the Bribery Act, speaking out against corruption in your sector, making it known when you have had to lose business due to your ethical principles, etc. That makes the ‘rogue employees’ defense much more plausible.
o Don't pay bribes. It's simple. It's simplistic. But it can never be repeated often enough.
What is the scope and Application of China’s Anti-bribery Laws?
With respect to corrupt acts occurring in China, the prohibition applies to all persons and entities, regardless of their nationalities or jurisdictions of incorporation. More specifically, in civil actions, the Chinese court generally has jurisdiction, including if the contract in dispute is entered into or performed in China, the property subject to dispute is located in China, or if the defendant has a representative office in China.
In criminal proceedings, Chinese authorities have jurisdiction to investigate crimes:
Committed in China, or on Chinese ships or aircrafts, or where the result of the criminal activity occurs in China;
Committed by Chinese citizens outside China;
Committed by foreigners against China or its citizens outside China (the minimum penalty for which is three years imprisonment), as long as the relevant activity is penalized under the law of the jurisdiction where the crime occurs;
Committed under international treaties, where China is obliged to exercise its jurisdiction.
In 2013 Chinese authorities issued a new “interpretation” for the Chinese Anti bribery Laws. Are there any clarifications which are particularly useful for companies doing business in China?
The Interpretation introduced welcomed clarifications in the sense that:
· It sets a minimum threshold of RMB 10,000 [approx. USD 1,600] as the trigger for criminal liability under Article 390. That this amount is rather low shows the commitment on the part of PRC authorities to increase their control on bribe giving.
· Various standards of seriousness are established. Thus a “serious case” arises when the value of the bribe is between RMB 200,000 [approx. USD 32,000] and RMB 1 million [approx. USD 160,000], or, under certain circumstances, when it is between RMB 100,000 [approx. USD 16,000] and RMB 200,000 [approx. USD 32,000]. “Extremely serious cases” are classified according to the following criteria:
· (i) the value of the bribes is more than RMB 1 million [approx. USD 160,000], or, under certain circumstances, between RMB 1 million [approx. USD 160,000] and RMB 500,000 [approx. USD 80,000];
· (ii) bribes are offered to government officials working in administrative enforcement and judicial departments; and
(iii) losses caused by the bribes exceed RMB 5 million